Correlation Between Seelos Therapeutics and Opthea

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

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

Diversification Opportunities for Seelos Therapeutics and Opthea

0.62

Correlation Coefficient

Seelos Therapeutics  Opthea

Poor diversification

The 3 months correlation between Seelos and Opthea is 0.62. Overlapping area represents the amount of risk that can be diversified away by holding Seelos Therapeutics and Opthea in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Opthea and Seelos 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 Seelos Therapeutics 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 Seelos Therapeutics i.e., Seelos Therapeutics and Opthea go up and down completely randomly.

Pair Corralation between Seelos Therapeutics and Opthea

Given the investment horizon of 90 days Seelos Therapeutics is expected to under-perform the Opthea. In addition to that, Seelos Therapeutics is 3.4 times more volatile than Opthea. It trades about -0.24 of its total potential returns per unit of risk. Opthea is currently generating about 0.01 per unit of volatility. If you would invest  341.00  in Opthea on September 17, 2024 and sell it today you would lose (7.00) from holding Opthea or give up 2.05% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	70.77%
Values	Daily Returns

Seelos Therapeutics  vs.  Opthea

Seelos Therapeutics

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Seelos Therapeutics has generated negative risk-adjusted returns adding no value to investors with long positions. Despite inconsistent performance in the last few months, the Stock's technical and fundamental indicators remain quite persistent which may send shares a bit higher in January 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Opthea

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Opthea are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. 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.

Pair Trading with Seelos Therapeutics and Opthea

The main advantage of trading using opposite Seelos Therapeutics and Opthea positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Seelos Therapeutics 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 Seelos Therapeutics 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.

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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 Commodity Directory module to find actively traded commodities issued by global exchanges.