Correlation Between Verona Pharma and Oculis Holding
Can any of the company-specific risk be diversified away by investing in both Verona Pharma and Oculis Holding 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 Verona Pharma and Oculis Holding into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Verona Pharma PLC and Oculis Holding AG, you can compare the effects of market volatilities on Verona Pharma and Oculis Holding 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 Verona Pharma with a short position of Oculis Holding. Check out your portfolio center. Please also check ongoing floating volatility patterns of Verona Pharma and Oculis Holding.
Diversification Opportunities for Verona Pharma and Oculis Holding
0.79 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Verona and Oculis is 0.79. Overlapping area represents the amount of risk that can be diversified away by holding Verona Pharma PLC and Oculis Holding AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Oculis Holding AG and Verona Pharma 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 Verona Pharma PLC are associated (or correlated) with Oculis Holding. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Oculis Holding AG has no effect on the direction of Verona Pharma i.e., Verona Pharma and Oculis Holding go up and down completely randomly.
Pair Corralation between Verona Pharma and Oculis Holding
Given the investment horizon of 90 days Verona Pharma is expected to generate 15.15 times less return on investment than Oculis Holding. But when comparing it to its historical volatility, Verona Pharma PLC is 22.14 times less risky than Oculis Holding. It trades about 0.13 of its potential returns per unit of risk. Oculis Holding AG is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest 145.00 in Oculis Holding AG on September 4, 2024 and sell it today you would earn a total of 245.00 from holding Oculis Holding AG or generate 168.97% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 61.94% |
| Values | Daily Returns |
Verona Pharma PLC vs. Oculis Holding AG
Performance |
| Timeline |
| Verona Pharma PLC |
| Oculis Holding AG |
Verona Pharma and Oculis Holding Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Verona Pharma and Oculis Holding
The main advantage of trading using opposite Verona Pharma and Oculis Holding positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Verona Pharma position performs unexpectedly, Oculis Holding 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 Oculis Holding will offset losses from the drop in Oculis Holding's long position.| Verona Pharma vs. Crinetics Pharmaceuticals | Verona Pharma vs. Enanta Pharmaceuticals | Verona Pharma vs. Amicus Therapeutics | Verona Pharma vs. Connect Biopharma Holdings |
| Oculis Holding vs. Western Midstream Partners | Oculis Holding vs. Pure Cycle | Oculis Holding vs. Compania Cervecerias Unidas | Oculis Holding vs. Atmos Energy |
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 Portfolio Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.
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