Correlation Between Onconova Therapeutics and Evofem Biosciences

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

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

Diversification Opportunities for Onconova Therapeutics and Evofem Biosciences

0.11

Correlation Coefficient

Onconova Therapeutics  Evofem Biosciences

Average diversification

The 3 months correlation between Onconova and Evofem is 0.11. Overlapping area represents the amount of risk that can be diversified away by holding Onconova Therapeutics and Evofem Biosciences in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Evofem Biosciences and Onconova 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 Onconova Therapeutics are associated (or correlated) with Evofem Biosciences. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Evofem Biosciences has no effect on the direction of Onconova Therapeutics i.e., Onconova Therapeutics and Evofem Biosciences go up and down completely randomly.

Pair Corralation between Onconova Therapeutics and Evofem Biosciences

Given the investment horizon of 90 days Onconova Therapeutics is expected to generate 0.26 times more return on investment than Evofem Biosciences. However, Onconova Therapeutics is 3.78 times less risky than Evofem Biosciences. It trades about -0.11 of its potential returns per unit of risk. Evofem Biosciences is currently generating about -0.06 per unit of risk. If you would invest  117.00  in Onconova Therapeutics on August 31, 2024 and sell it today you would lose (15.00) from holding Onconova Therapeutics or give up 12.82% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	84.38%
Values	Daily Returns

Onconova Therapeutics  vs.  Evofem Biosciences

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.

Evofem Biosciences

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Evofem Biosciences has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound primary indicators, Evofem Biosciences is not utilizing all of its potentials. The newest stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Onconova Therapeutics and Evofem Biosciences

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

The idea behind Onconova Therapeutics and Evofem Biosciences 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 Portfolio Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.