Correlation Between Ono Pharmaceutical and ALX Resources

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

By analyzing existing cross correlation between Ono Pharmaceutical Co and ALX Resources Corp, you can compare the effects of market volatilities on Ono Pharmaceutical and ALX Resources 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 Ono Pharmaceutical with a short position of ALX Resources. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ono Pharmaceutical and ALX Resources.

Diversification Opportunities for Ono Pharmaceutical and ALX Resources

-0.44

Correlation Coefficient

Ono Pharmaceutical  ALX Resources

Very good diversification

The 3 months correlation between Ono and ALX is -0.44. Overlapping area represents the amount of risk that can be diversified away by holding Ono Pharmaceutical Co and ALX Resources Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ALX Resources Corp and Ono Pharmaceutical 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 Ono Pharmaceutical Co are associated (or correlated) with ALX Resources. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ALX Resources Corp has no effect on the direction of Ono Pharmaceutical i.e., Ono Pharmaceutical and ALX Resources go up and down completely randomly.

Pair Corralation between Ono Pharmaceutical and ALX Resources

Assuming the 90 days horizon Ono Pharmaceutical Co is expected to under-perform the ALX Resources. But the pink sheet apears to be less risky and, when comparing its historical volatility, Ono Pharmaceutical Co is 1.36 times less risky than ALX Resources. The pink sheet trades about -0.07 of its potential returns per unit of risk. The ALX Resources Corp is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest  1.84  in ALX Resources Corp on September 15, 2024 and sell it today you would earn a total of  0.23  from holding ALX Resources Corp or generate 12.5% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	40.0%
Values	Daily Returns

Ono Pharmaceutical Co  vs.  ALX Resources Corp

Ono Pharmaceutical

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Ono Pharmaceutical Co has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's essential indicators remain nearly stable which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

ALX Resources Corp

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in ALX Resources Corp are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite nearly weak technical and fundamental indicators, ALX Resources reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Ono Pharmaceutical and ALX Resources

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

The idea behind Ono Pharmaceutical Co and ALX Resources Corp 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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..