Correlation Between Finch Therapeutics and Ontrak

Can any of the company-specific risk be diversified away by investing in both Finch Therapeutics and Ontrak 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 Finch Therapeutics and Ontrak into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Finch Therapeutics Group and Ontrak Inc, you can compare the effects of market volatilities on Finch Therapeutics and Ontrak 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 Finch Therapeutics with a short position of Ontrak. Check out your portfolio center. Please also check ongoing floating volatility patterns of Finch Therapeutics and Ontrak.

Diversification Opportunities for Finch Therapeutics and Ontrak

-0.53

Correlation Coefficient

Finch Therapeutics  Ontrak

Excellent diversification

The 3 months correlation between Finch and Ontrak is -0.53. Overlapping area represents the amount of risk that can be diversified away by holding Finch Therapeutics Group and Ontrak Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ontrak Inc and Finch 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 Finch Therapeutics Group are associated (or correlated) with Ontrak. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ontrak Inc has no effect on the direction of Finch Therapeutics i.e., Finch Therapeutics and Ontrak go up and down completely randomly.

Pair Corralation between Finch Therapeutics and Ontrak

Given the investment horizon of 90 days Finch Therapeutics Group is expected to generate 1.32 times more return on investment than Ontrak. However, Finch Therapeutics is 1.32 times more volatile than Ontrak Inc. It trades about 0.04 of its potential returns per unit of risk. Ontrak Inc is currently generating about -0.1 per unit of risk. If you would invest  855.00  in Finch Therapeutics Group on August 31, 2024 and sell it today you would lose (4.00) from holding Finch Therapeutics Group or give up 0.47% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

Finch Therapeutics Group  vs.  Ontrak Inc

Finch Therapeutics

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Finch Therapeutics Group has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fairly strong fundamental indicators, Finch Therapeutics is not utilizing all of its potentials. The latest stock price confusion, may contribute to short-horizon losses for the traders.

Ontrak Inc

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Ontrak Inc has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable forward-looking signals, Ontrak is not utilizing all of its potentials. The latest stock price agitation, may contribute to short-term losses for the retail investors.

Pair Trading with Finch Therapeutics and Ontrak

The main advantage of trading using opposite Finch Therapeutics and Ontrak positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Finch Therapeutics position performs unexpectedly, Ontrak 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 Ontrak will offset losses from the drop in Ontrak's long position.

The idea behind Finch Therapeutics Group and Ontrak Inc 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.

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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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.