Correlation Between Superior Plus and Omeros

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Can any of the company-specific risk be diversified away by investing in both Superior Plus and Omeros 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 Superior Plus and Omeros into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Superior Plus Corp and Omeros, you can compare the effects of market volatilities on Superior Plus and Omeros 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 Superior Plus with a short position of Omeros. Check out your portfolio center. Please also check ongoing floating volatility patterns of Superior Plus and Omeros.

Diversification Opportunities for Superior Plus and Omeros

-0.55
  Correlation Coefficient

Excellent diversification

The 3 months correlation between Superior and Omeros is -0.55. Overlapping area represents the amount of risk that can be diversified away by holding Superior Plus Corp and Omeros in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Omeros and Superior Plus 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 Superior Plus Corp are associated (or correlated) with Omeros. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Omeros has no effect on the direction of Superior Plus i.e., Superior Plus and Omeros go up and down completely randomly.

Pair Corralation between Superior Plus and Omeros

Assuming the 90 days horizon Superior Plus is expected to generate 14.79 times less return on investment than Omeros. But when comparing it to its historical volatility, Superior Plus Corp is 3.25 times less risky than Omeros. It trades about 0.07 of its potential returns per unit of risk. Omeros is currently generating about 0.34 of returns per unit of risk over similar time horizon. If you would invest  401.00  in Omeros on September 6, 2024 and sell it today you would earn a total of  698.00  from holding Omeros or generate 174.06% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthVery Weak
Accuracy95.65%
ValuesDaily Returns

Superior Plus Corp  vs.  Omeros

 Performance 
       Timeline  
Superior Plus Corp 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days Superior Plus Corp has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest uncertain performance, the Stock's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.
Omeros 

Risk-Adjusted Performance

18 of 100

 
Weak
 
Strong
Solid
Compared to the overall equity markets, risk-adjusted returns on investments in Omeros are ranked lower than 18 (%) of all global equities and portfolios over the last 90 days. Despite nearly unsteady basic indicators, Omeros reported solid returns over the last few months and may actually be approaching a breakup point.

Superior Plus and Omeros Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Superior Plus and Omeros

The main advantage of trading using opposite Superior Plus and Omeros positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Superior Plus position performs unexpectedly, Omeros 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 Omeros will offset losses from the drop in Omeros' long position.
The idea behind Superior Plus Corp and Omeros 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.
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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.

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