Correlation Between Omega Healthcare and Alibaba Group
Can any of the company-specific risk be diversified away by investing in both Omega Healthcare and Alibaba Group 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 Omega Healthcare and Alibaba Group into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Omega Healthcare Investors, and Alibaba Group Holding, you can compare the effects of market volatilities on Omega Healthcare and Alibaba Group 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 Omega Healthcare with a short position of Alibaba Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of Omega Healthcare and Alibaba Group.
Diversification Opportunities for Omega Healthcare and Alibaba Group
0.18 | Correlation Coefficient |
Average diversification
The 3 months correlation between Omega and Alibaba is 0.18. Overlapping area represents the amount of risk that can be diversified away by holding Omega Healthcare Investors, and Alibaba Group Holding in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Alibaba Group Holding and Omega Healthcare 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 Omega Healthcare Investors, are associated (or correlated) with Alibaba Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Alibaba Group Holding has no effect on the direction of Omega Healthcare i.e., Omega Healthcare and Alibaba Group go up and down completely randomly.
Pair Corralation between Omega Healthcare and Alibaba Group
Assuming the 90 days trading horizon Omega Healthcare Investors, is expected to under-perform the Alibaba Group. But the stock apears to be less risky and, when comparing its historical volatility, Omega Healthcare Investors, is 1.9 times less risky than Alibaba Group. The stock trades about -0.21 of its potential returns per unit of risk. The Alibaba Group Holding is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest 1,878 in Alibaba Group Holding on October 30, 2024 and sell it today you would earn a total of 23.00 from holding Alibaba Group Holding or generate 1.22% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Omega Healthcare Investors, vs. Alibaba Group Holding
Performance |
| Timeline |
| Omega Healthcare Inv |
| Alibaba Group Holding |
Omega Healthcare and Alibaba Group Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Omega Healthcare and Alibaba Group
The main advantage of trading using opposite Omega Healthcare and Alibaba Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Omega Healthcare position performs unexpectedly, Alibaba Group 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 Alibaba Group will offset losses from the drop in Alibaba Group's long position.| Omega Healthcare vs. Metalurgica Gerdau SA | Omega Healthcare vs. Burlington Stores, | Omega Healthcare vs. Metalrgica Riosulense SA | Omega Healthcare vs. Liberty Broadband |
| Alibaba Group vs. Globus Medical, | Alibaba Group vs. Tres Tentos Agroindustrial | Alibaba Group vs. United Rentals | Alibaba Group vs. CVS Health |
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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.
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