Correlation Between Opko Health and Arad Investment
Can any of the company-specific risk be diversified away by investing in both Opko Health and Arad Investment 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 Opko Health and Arad Investment into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Opko Health and Arad Investment Industrial, you can compare the effects of market volatilities on Opko Health and Arad Investment 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 Opko Health with a short position of Arad Investment. Check out your portfolio center. Please also check ongoing floating volatility patterns of Opko Health and Arad Investment.
Diversification Opportunities for Opko Health and Arad Investment
-0.5 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Opko and Arad is -0.5. Overlapping area represents the amount of risk that can be diversified away by holding Opko Health and Arad Investment Industrial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Arad Investment Indu and Opko Health 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 Opko Health are associated (or correlated) with Arad Investment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Arad Investment Indu has no effect on the direction of Opko Health i.e., Opko Health and Arad Investment go up and down completely randomly.
Pair Corralation between Opko Health and Arad Investment
Assuming the 90 days trading horizon Opko Health is expected to generate 1.66 times less return on investment than Arad Investment. In addition to that, Opko Health is 1.22 times more volatile than Arad Investment Industrial. It trades about 0.09 of its total potential returns per unit of risk. Arad Investment Industrial is currently generating about 0.18 per unit of volatility. If you would invest 730,800 in Arad Investment Industrial on November 3, 2024 and sell it today you would earn a total of 1,009,200 from holding Arad Investment Industrial or generate 138.1% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Opko Health vs. Arad Investment Industrial
Performance |
| Timeline |
| Opko Health |
| Arad Investment Indu |
Opko Health and Arad Investment Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Opko Health and Arad Investment
The main advantage of trading using opposite Opko Health and Arad Investment positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Opko Health position performs unexpectedly, Arad Investment 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 Arad Investment will offset losses from the drop in Arad Investment's long position.| Opko Health vs. Teva Pharmaceutical Industries | Opko Health vs. Tower Semiconductor | Opko Health vs. Nice | Opko Health vs. Elbit Systems |
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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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.
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