Correlation Between Defence Therapeutics and ChitogenX
Can any of the company-specific risk be diversified away by investing in both Defence Therapeutics and ChitogenX 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 Defence Therapeutics and ChitogenX into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Defence Therapeutics and ChitogenX, you can compare the effects of market volatilities on Defence Therapeutics and ChitogenX 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 Defence Therapeutics with a short position of ChitogenX. Check out your portfolio center. Please also check ongoing floating volatility patterns of Defence Therapeutics and ChitogenX.
Diversification Opportunities for Defence Therapeutics and ChitogenX
0.25 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Defence and ChitogenX is 0.25. Overlapping area represents the amount of risk that can be diversified away by holding Defence Therapeutics and ChitogenX in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ChitogenX and Defence 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 Defence Therapeutics are associated (or correlated) with ChitogenX. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ChitogenX has no effect on the direction of Defence Therapeutics i.e., Defence Therapeutics and ChitogenX go up and down completely randomly.
Pair Corralation between Defence Therapeutics and ChitogenX
Assuming the 90 days horizon Defence Therapeutics is expected to generate 0.46 times more return on investment than ChitogenX. However, Defence Therapeutics is 2.15 times less risky than ChitogenX. It trades about -0.12 of its potential returns per unit of risk. ChitogenX is currently generating about -0.07 per unit of risk. If you would invest 201.00 in Defence Therapeutics on September 14, 2024 and sell it today you would lose (160.00) from holding Defence Therapeutics or give up 79.6% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Defence Therapeutics vs. ChitogenX
Performance |
| Timeline |
| Defence Therapeutics |
| ChitogenX |
Defence Therapeutics and ChitogenX Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Defence Therapeutics and ChitogenX
The main advantage of trading using opposite Defence Therapeutics and ChitogenX positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Defence Therapeutics position performs unexpectedly, ChitogenX 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 ChitogenX will offset losses from the drop in ChitogenX's long position.| Defence Therapeutics vs. Sino Biopharmaceutical Ltd | Defence Therapeutics vs. Institute of Biomedical | Defence Therapeutics vs. Aileron Therapeutics | Defence Therapeutics vs. Enlivex Therapeutics |
| ChitogenX vs. Sino Biopharmaceutical Ltd | ChitogenX vs. Defence Therapeutics | ChitogenX vs. Aileron Therapeutics | ChitogenX vs. Enlivex Therapeutics |
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 Stocks Directory module to find actively traded stocks across global markets.
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