Correlation Between Guardion Health and Onconova Therapeutics

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

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

Diversification Opportunities for Guardion Health and Onconova Therapeutics

-0.09

Correlation Coefficient

Guardion Health  Onconova Therapeutics

Good diversification

The 3 months correlation between Guardion and Onconova is -0.09. Overlapping area represents the amount of risk that can be diversified away by holding Guardion Health Sciences and Onconova Therapeutics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Onconova Therapeutics and Guardion Health 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 Guardion Health Sciences are associated (or correlated) with Onconova Therapeutics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Onconova Therapeutics has no effect on the direction of Guardion Health i.e., Guardion Health and Onconova Therapeutics go up and down completely randomly.

Pair Corralation between Guardion Health and Onconova Therapeutics

Given the investment horizon of 90 days Guardion Health Sciences is expected to generate 3.2 times more return on investment than Onconova Therapeutics. However, Guardion Health is 3.2 times more volatile than Onconova Therapeutics. It trades about 0.04 of its potential returns per unit of risk. Onconova Therapeutics is currently generating about -0.35 per unit of risk. If you would invest  262.00  in Guardion Health Sciences on September 30, 2024 and sell it today you would earn a total of  67.00  from holding Guardion Health Sciences or generate 25.57% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	3.69%
Values	Daily Returns

Guardion Health Sciences  vs.  Onconova Therapeutics

Guardion Health Sciences

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Guardion Health Sciences has generated negative risk-adjusted returns adding no value to investors with long positions. Despite inconsistent performance in the last few months, the Stock's basic indicators remain fairly strong which may send shares a bit higher in January 2025. The recent confusion may also be a sign of long-lasting up-swing for the firm traders.

Onconova Therapeutics

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Onconova Therapeutics has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong basic indicators, Onconova Therapeutics is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Guardion Health and Onconova Therapeutics

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

The idea behind Guardion Health Sciences and Onconova Therapeutics 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.