Correlation Between Opthea and Awakn Life

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

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

Diversification Opportunities for Opthea and Awakn Life

-0.24

Correlation Coefficient

Opthea  Awakn Life

Very good diversification

The 3 months correlation between Opthea and Awakn is -0.24. Overlapping area represents the amount of risk that can be diversified away by holding Opthea and Awakn Life Sciences in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Awakn Life Sciences and Opthea 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 Opthea are associated (or correlated) with Awakn Life. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Awakn Life Sciences has no effect on the direction of Opthea i.e., Opthea and Awakn Life go up and down completely randomly.

Pair Corralation between Opthea and Awakn Life

Considering the 90-day investment horizon Opthea is expected to under-perform the Awakn Life. But the stock apears to be less risky and, when comparing its historical volatility, Opthea is 2.14 times less risky than Awakn Life. The stock trades about 0.0 of its potential returns per unit of risk. The Awakn Life Sciences is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest  7.50  in Awakn Life Sciences on September 18, 2024 and sell it today you would lose (1.00) from holding Awakn Life Sciences or give up 13.33% of portfolio value over 90 days.

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

Opthea  vs.  Awakn Life Sciences

Opthea

Risk-Adjusted Performance

0 of 100

Weak

Over the last 90 days Opthea has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Opthea is not utilizing all of its potentials. The recent stock price uproar, may contribute to short-horizon losses for the private investors.

Awakn Life Sciences

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Awakn Life Sciences are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Awakn Life reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Opthea and Awakn Life

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

The idea behind Opthea and Awakn Life Sciences 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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.