Correlation Between Marstons PLC and Ondine Biomedical

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

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

Diversification Opportunities for Marstons PLC and Ondine Biomedical

-0.45

Correlation Coefficient

Marstons PLC  Ondine Biomedical

Very good diversification

The 3 months correlation between Marstons and Ondine is -0.45. Overlapping area represents the amount of risk that can be diversified away by holding Marstons PLC and Ondine Biomedical in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ondine Biomedical and Marstons PLC 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 Marstons PLC are associated (or correlated) with Ondine Biomedical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ondine Biomedical has no effect on the direction of Marstons PLC i.e., Marstons PLC and Ondine Biomedical go up and down completely randomly.

Pair Corralation between Marstons PLC and Ondine Biomedical

Assuming the 90 days trading horizon Marstons PLC is expected to generate 0.5 times more return on investment than Ondine Biomedical. However, Marstons PLC is 1.99 times less risky than Ondine Biomedical. It trades about 0.02 of its potential returns per unit of risk. Ondine Biomedical is currently generating about -0.01 per unit of risk. If you would invest  3,926  in Marstons PLC on September 23, 2024 and sell it today you would earn a total of  624.00  from holding Marstons PLC or generate 15.89% return on investment over 90 days.

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

Marstons PLC  vs.  Ondine Biomedical

Marstons PLC

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Marstons PLC are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unsteady basic indicators, Marstons PLC unveiled solid returns over the last few months and may actually be approaching a breakup point.

Ondine Biomedical

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Ondine Biomedical are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady technical and fundamental indicators, Ondine Biomedical exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Marstons PLC and Ondine Biomedical

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

The idea behind Marstons PLC and Ondine Biomedical 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 Equity Valuation module to check real value of public entities based on technical and fundamental data.