Correlation Between XOMA and Rezolute

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

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

Diversification Opportunities for XOMA and Rezolute

0.41

Correlation Coefficient

XOMA  Rezolute

Very weak diversification

The 3 months correlation between XOMA and Rezolute is 0.41. Overlapping area represents the amount of risk that can be diversified away by holding XOMA Corp. and Rezolute in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Rezolute and XOMA 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 XOMA Corporation are associated (or correlated) with Rezolute. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Rezolute has no effect on the direction of XOMA i.e., XOMA and Rezolute go up and down completely randomly.

Pair Corralation between XOMA and Rezolute

Assuming the 90 days horizon XOMA is expected to generate 9.02 times less return on investment than Rezolute. But when comparing it to its historical volatility, XOMA Corporation is 11.15 times less risky than Rezolute. It trades about 0.12 of its potential returns per unit of risk. Rezolute is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest  437.00  in Rezolute on September 5, 2024 and sell it today you would earn a total of  98.00  from holding Rezolute or generate 22.43% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	98.44%
Values	Daily Returns

XOMA Corp.  vs.  Rezolute

XOMA

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in XOMA Corporation are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy basic indicators, XOMA is not utilizing all of its potentials. The latest stock price disarray, may contribute to short-term losses for the investors.

Rezolute

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Rezolute are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively conflicting essential indicators, Rezolute unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with XOMA and Rezolute

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

The idea behind XOMA Corporation and Rezolute 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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.