Correlation Between Omega Healthcare and Austevoll Seafood

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Can any of the company-specific risk be diversified away by investing in both Omega Healthcare and Austevoll Seafood 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 Austevoll Seafood 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 Austevoll Seafood ASA, you can compare the effects of market volatilities on Omega Healthcare and Austevoll Seafood 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 Austevoll Seafood. Check out your portfolio center. Please also check ongoing floating volatility patterns of Omega Healthcare and Austevoll Seafood.

Diversification Opportunities for Omega Healthcare and Austevoll Seafood

0.52
  Correlation Coefficient

Very weak diversification

The 3 months correlation between Omega and Austevoll is 0.52. Overlapping area represents the amount of risk that can be diversified away by holding Omega Healthcare Investors and Austevoll Seafood ASA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Austevoll Seafood ASA 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 Austevoll Seafood. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Austevoll Seafood ASA has no effect on the direction of Omega Healthcare i.e., Omega Healthcare and Austevoll Seafood go up and down completely randomly.

Pair Corralation between Omega Healthcare and Austevoll Seafood

Considering the 90-day investment horizon Omega Healthcare Investors is expected to generate 0.61 times more return on investment than Austevoll Seafood. However, Omega Healthcare Investors is 1.65 times less risky than Austevoll Seafood. It trades about 0.09 of its potential returns per unit of risk. Austevoll Seafood ASA is currently generating about 0.05 per unit of risk. If you would invest  2,739  in Omega Healthcare Investors on August 31, 2024 and sell it today you would earn a total of  1,322  from holding Omega Healthcare Investors or generate 48.27% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthWeak
Accuracy47.59%
ValuesDaily Returns

Omega Healthcare Investors  vs.  Austevoll Seafood ASA

 Performance 
       Timeline  
Omega Healthcare Inv 

Risk-Adjusted Performance

5 of 100

 
Weak
 
Strong
Modest
Compared to the overall equity markets, risk-adjusted returns on investments in Omega Healthcare Investors are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite fairly strong technical indicators, Omega Healthcare is not utilizing all of its potentials. The latest stock price confusion, may contribute to short-horizon losses for the traders.
Austevoll Seafood ASA 

Risk-Adjusted Performance

4 of 100

 
Weak
 
Strong
Insignificant
Compared to the overall equity markets, risk-adjusted returns on investments in Austevoll Seafood ASA are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, Austevoll Seafood is not utilizing all of its potentials. The newest stock price disturbance, may contribute to mid-run losses for the stockholders.

Omega Healthcare and Austevoll Seafood Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Omega Healthcare and Austevoll Seafood

The main advantage of trading using opposite Omega Healthcare and Austevoll Seafood positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Omega Healthcare position performs unexpectedly, Austevoll Seafood 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 Austevoll Seafood will offset losses from the drop in Austevoll Seafood's long position.
The idea behind Omega Healthcare Investors and Austevoll Seafood ASA 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 Portfolio Dashboard module to portfolio dashboard that provides centralized access to all your investments.

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