Correlation Between Protalix Biotherapeutics and Ocuphire Pharma

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

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

Diversification Opportunities for Protalix Biotherapeutics and Ocuphire Pharma

0.59

Correlation Coefficient

Protalix Biotherapeutics  Ocuphire Pharma

Very weak diversification

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

Pair Corralation between Protalix Biotherapeutics and Ocuphire Pharma

Considering the 90-day investment horizon Protalix Biotherapeutics is expected to under-perform the Ocuphire Pharma. But the stock apears to be less risky and, when comparing its historical volatility, Protalix Biotherapeutics is 1.09 times less risky than Ocuphire Pharma. The stock trades about -0.04 of its potential returns per unit of risk. The Ocuphire Pharma is currently generating about -0.01 of returns per unit of risk over similar time horizon. If you would invest  189.00  in Ocuphire Pharma on March 14, 2024 and sell it today you would lose (17.00) from holding Ocuphire Pharma or give up 8.99% of portfolio value over 90 days.

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

Protalix Biotherapeutics  vs.  Ocuphire Pharma

Protalix Biotherapeutics

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Protalix Biotherapeutics has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest weak performance, the Stock's essential indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Ocuphire Pharma

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Ocuphire Pharma has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable basic indicators, Ocuphire Pharma is not utilizing all of its potentials. The current stock price agitation, may contribute to short-term losses for the retail investors.

Pair Trading with Protalix Biotherapeutics and Ocuphire Pharma

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

The idea behind Protalix Biotherapeutics and Ocuphire Pharma 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.