Correlation Between Defence Therapeutics and Oxford Cannabinoid

Can any of the company-specific risk be diversified away by investing in both Defence Therapeutics and Oxford Cannabinoid at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Defence Therapeutics and Oxford Cannabinoid into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Defence Therapeutics and Oxford Cannabinoid Technologies, you can compare the effects of market volatilities on Defence Therapeutics and Oxford Cannabinoid and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Defence Therapeutics with a short position of Oxford Cannabinoid. Check out your portfolio center. Please also check ongoing floating volatility patterns of Defence Therapeutics and Oxford Cannabinoid.

Diversification Opportunities for Defence Therapeutics and Oxford Cannabinoid

0.0

Correlation Coefficient

Defence Therapeutics  Oxford Cannabinoid

Pay attention - limited upside

The 3 months correlation between Defence and Oxford is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Defence Therapeutics and Oxford Cannabinoid Technologie in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Oxford Cannabinoid and Defence Therapeutics is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Defence Therapeutics are associated (or correlated) with Oxford Cannabinoid. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Oxford Cannabinoid has no effect on the direction of Defence Therapeutics i.e., Defence Therapeutics and Oxford Cannabinoid go up and down completely randomly.

Pair Corralation between Defence Therapeutics and Oxford Cannabinoid

Assuming the 90 days horizon Defence Therapeutics is expected to under-perform the Oxford Cannabinoid. But the otc stock apears to be less risky and, when comparing its historical volatility, Defence Therapeutics is 11.52 times less risky than Oxford Cannabinoid. The otc stock trades about -0.12 of its potential returns per unit of risk. The Oxford Cannabinoid Technologies is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest  0.45  in Oxford Cannabinoid Technologies on September 14, 2024 and sell it today you would lose (0.17) from holding Oxford Cannabinoid Technologies or give up 37.78% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	99.63%
Values	Daily Returns

Defence Therapeutics  vs.  Oxford Cannabinoid Technologie

Defence Therapeutics

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Defence Therapeutics are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable technical and fundamental indicators, Defence Therapeutics is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Oxford Cannabinoid

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Oxford Cannabinoid Technologies has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable technical indicators, Oxford Cannabinoid is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Defence Therapeutics and Oxford Cannabinoid

The main advantage of trading using opposite Defence Therapeutics and Oxford Cannabinoid positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Defence Therapeutics position performs unexpectedly, Oxford Cannabinoid can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Oxford Cannabinoid will offset losses from the drop in Oxford Cannabinoid's long position.

The idea behind Defence Therapeutics and Oxford Cannabinoid Technologies pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

Check out your portfolio center.

Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Portfolio Dashboard module to portfolio dashboard that provides centralized access to all your investments.