Correlation Between OBI Pharma and AOPEN
Can any of the company-specific risk be diversified away by investing in both OBI Pharma and AOPEN 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 OBI Pharma and AOPEN into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between OBI Pharma and AOPEN Inc, you can compare the effects of market volatilities on OBI Pharma and AOPEN 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 OBI Pharma with a short position of AOPEN. Check out your portfolio center. Please also check ongoing floating volatility patterns of OBI Pharma and AOPEN.
Diversification Opportunities for OBI Pharma and AOPEN
0.92 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between OBI and AOPEN is 0.92. Overlapping area represents the amount of risk that can be diversified away by holding OBI Pharma and AOPEN Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AOPEN Inc and OBI 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 OBI Pharma are associated (or correlated) with AOPEN. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AOPEN Inc has no effect on the direction of OBI Pharma i.e., OBI Pharma and AOPEN go up and down completely randomly.
Pair Corralation between OBI Pharma and AOPEN
Assuming the 90 days trading horizon OBI Pharma is expected to under-perform the AOPEN. But the stock apears to be less risky and, when comparing its historical volatility, OBI Pharma is 1.31 times less risky than AOPEN. The stock trades about -0.01 of its potential returns per unit of risk. The AOPEN Inc is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest 5,210 in AOPEN Inc on August 30, 2024 and sell it today you would earn a total of 280.00 from holding AOPEN Inc or generate 5.37% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
OBI Pharma vs. AOPEN Inc
Performance |
| Timeline |
| OBI Pharma |
| AOPEN Inc |
OBI Pharma and AOPEN Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with OBI Pharma and AOPEN
The main advantage of trading using opposite OBI Pharma and AOPEN positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if OBI Pharma position performs unexpectedly, AOPEN 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 AOPEN will offset losses from the drop in AOPEN's long position.| OBI Pharma vs. TaiMed Biologics | OBI Pharma vs. PharmaEngine | OBI Pharma vs. Medigen Biotechnology | OBI Pharma vs. TTY Biopharm Co |
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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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