Correlation Between X4 Pharmaceuticals and Ocean Biomedical

Can any of the company-specific risk be diversified away by investing in both X4 Pharmaceuticals and Ocean Biomedical 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 X4 Pharmaceuticals and Ocean Biomedical into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between X4 Pharmaceuticals and Ocean Biomedical, you can compare the effects of market volatilities on X4 Pharmaceuticals and Ocean Biomedical 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 X4 Pharmaceuticals with a short position of Ocean Biomedical. Check out your portfolio center. Please also check ongoing floating volatility patterns of X4 Pharmaceuticals and Ocean Biomedical.

Diversification Opportunities for X4 Pharmaceuticals and Ocean Biomedical

0.59

Correlation Coefficient

X4 Pharmaceuticals  Ocean Biomedical

Very weak diversification

The 3 months correlation between XFOR and Ocean is 0.59. Overlapping area represents the amount of risk that can be diversified away by holding X4 Pharmaceuticals and Ocean Biomedical in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ocean Biomedical and X4 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 X4 Pharmaceuticals are associated (or correlated) with Ocean Biomedical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ocean Biomedical has no effect on the direction of X4 Pharmaceuticals i.e., X4 Pharmaceuticals and Ocean Biomedical go up and down completely randomly.

Pair Corralation between X4 Pharmaceuticals and Ocean Biomedical

Given the investment horizon of 90 days X4 Pharmaceuticals is expected to generate 2.67 times more return on investment than Ocean Biomedical. However, X4 Pharmaceuticals is 2.67 times more volatile than Ocean Biomedical. It trades about 0.07 of its potential returns per unit of risk. Ocean Biomedical is currently generating about -0.12 per unit of risk. If you would invest  71.00  in X4 Pharmaceuticals on September 13, 2024 and sell it today you would earn a total of  5.00  from holding X4 Pharmaceuticals or generate 7.04% return on investment over 90 days.

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

X4 Pharmaceuticals  vs.  Ocean Biomedical

X4 Pharmaceuticals

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in X4 Pharmaceuticals are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Even with relatively unfluctuating basic indicators, X4 Pharmaceuticals reported solid returns over the last few months and may actually be approaching a breakup point.

Ocean Biomedical

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Ocean Biomedical 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 technical and fundamental indicators remain somewhat strong which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with X4 Pharmaceuticals and Ocean Biomedical

The main advantage of trading using opposite X4 Pharmaceuticals and Ocean Biomedical positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if X4 Pharmaceuticals position performs unexpectedly, Ocean Biomedical 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 Ocean Biomedical will offset losses from the drop in Ocean Biomedical's long position.

The idea behind X4 Pharmaceuticals and Ocean Biomedical 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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.