Correlation Between Genenta Science and Opthea

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

By analyzing existing cross correlation between Genenta Science SpA and Opthea, you can compare the effects of market volatilities on Genenta Science and Opthea 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 Genenta Science with a short position of Opthea. Check out your portfolio center. Please also check ongoing floating volatility patterns of Genenta Science and Opthea.

Diversification Opportunities for Genenta Science and Opthea

0.49

Correlation Coefficient

Genenta Science  Opthea

Very weak diversification

The 3 months correlation between Genenta and Opthea is 0.49. Overlapping area represents the amount of risk that can be diversified away by holding Genenta Science SpA and Opthea in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Opthea and Genenta Science 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 Genenta Science SpA are associated (or correlated) with Opthea. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Opthea has no effect on the direction of Genenta Science i.e., Genenta Science and Opthea go up and down completely randomly.

Pair Corralation between Genenta Science and Opthea

Given the investment horizon of 90 days Genenta Science SpA is expected to generate 1.43 times more return on investment than Opthea. However, Genenta Science is 1.43 times more volatile than Opthea. It trades about 0.09 of its potential returns per unit of risk. Opthea is currently generating about 0.06 per unit of risk. If you would invest  400.00  in Genenta Science SpA on September 12, 2024 and sell it today you would earn a total of  115.00  from holding Genenta Science SpA or generate 28.75% return on investment over 90 days.

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

Genenta Science SpA  vs.  Opthea

Genenta Science SpA

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Genenta Science SpA are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Genenta Science sustained solid returns over the last few months and may actually be approaching a breakup point.

Opthea

Risk-Adjusted Performance

4 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Opthea are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unfluctuating basic indicators, Opthea unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Genenta Science and Opthea

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

The idea behind Genenta Science SpA and Opthea 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 Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.