Correlation Between Opthea and Ibio
Can any of the company-specific risk be diversified away by investing in both Opthea and Ibio 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 Opthea and Ibio into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Opthea and Ibio Inc, you can compare the effects of market volatilities on Opthea and Ibio 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 Opthea with a short position of Ibio. Check out your portfolio center. Please also check ongoing floating volatility patterns of Opthea and Ibio.
Diversification Opportunities for Opthea and Ibio
Poor diversification
The 3 months correlation between Opthea and Ibio is 0.73. Overlapping area represents the amount of risk that can be diversified away by holding Opthea and Ibio Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ibio Inc and Opthea 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 Opthea are associated (or correlated) with Ibio. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ibio Inc has no effect on the direction of Opthea i.e., Opthea and Ibio go up and down completely randomly.
Pair Corralation between Opthea and Ibio
Considering the 90-day investment horizon Opthea is expected to under-perform the Ibio. But the stock apears to be less risky and, when comparing its historical volatility, Opthea is 1.36 times less risky than Ibio. The stock trades about -0.38 of its potential returns per unit of risk. The Ibio Inc is currently generating about -0.09 of returns per unit of risk over similar time horizon. If you would invest 287.00 in Ibio Inc on August 29, 2024 and sell it today you would lose (33.00) from holding Ibio Inc or give up 11.5% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Opthea vs. Ibio Inc
Performance |
| Timeline |
| Opthea |
| Ibio Inc |
Opthea and Ibio Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Opthea and Ibio
The main advantage of trading using opposite Opthea and Ibio positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Opthea position performs unexpectedly, Ibio 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 Ibio will offset losses from the drop in Ibio's long position.The idea behind Opthea and Ibio Inc 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.| Ibio vs. Jaguar Animal Health | Ibio vs. GeoVax Labs | Ibio vs. Ocugen Inc | Ibio vs. Tonix Pharmaceuticals Holding |
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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.
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