Correlation Between Tff Pharmaceuticals and XOMA Corp

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

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

Diversification Opportunities for Tff Pharmaceuticals and XOMA Corp

-0.49

Correlation Coefficient

Tff Pharmaceuticals  XOMA Corp

Very good diversification

The 3 months correlation between Tff and XOMA is -0.49. Overlapping area represents the amount of risk that can be diversified away by holding Tff Pharmaceuticals and XOMA Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on XOMA Corp and Tff Pharmaceuticals 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 Tff Pharmaceuticals are associated (or correlated) with XOMA Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of XOMA Corp has no effect on the direction of Tff Pharmaceuticals i.e., Tff Pharmaceuticals and XOMA Corp go up and down completely randomly.

Pair Corralation between Tff Pharmaceuticals and XOMA Corp

Given the investment horizon of 90 days Tff Pharmaceuticals is expected to under-perform the XOMA Corp. In addition to that, Tff Pharmaceuticals is 5.54 times more volatile than XOMA Corp. It trades about -0.28 of its total potential returns per unit of risk. XOMA Corp is currently generating about 0.14 per unit of volatility. If you would invest  3,086  in XOMA Corp on September 3, 2024 and sell it today you would earn a total of  259.00  from holding XOMA Corp or generate 8.39% return on investment over 90 days.

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

Tff Pharmaceuticals  vs.  XOMA Corp

Tff Pharmaceuticals

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Tff Pharmaceuticals has generated negative risk-adjusted returns adding no value to investors with long positions. Even with uncertain performance in the last few months, the Stock's technical and fundamental indicators remain relatively invariable which may send shares a bit higher in January 2025. The latest agitation may also be a sign of long-running up-swing for the enterprise retail investors.

XOMA Corp

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in XOMA Corp are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite somewhat conflicting primary indicators, XOMA Corp sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Tff Pharmaceuticals and XOMA Corp

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

The idea behind Tff Pharmaceuticals and XOMA 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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.