Correlation Between Opko Health and Teva Pharmaceutical
Can any of the company-specific risk be diversified away by investing in both Opko Health and Teva Pharmaceutical 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 Teva Pharmaceutical into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Opko Health and Teva Pharmaceutical Industries, you can compare the effects of market volatilities on Opko Health and Teva Pharmaceutical 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 Teva Pharmaceutical. Check out your portfolio center. Please also check ongoing floating volatility patterns of Opko Health and Teva Pharmaceutical.
Diversification Opportunities for Opko Health and Teva Pharmaceutical
0.03 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Opko and Teva is 0.03. Overlapping area represents the amount of risk that can be diversified away by holding Opko Health and Teva Pharmaceutical Industries in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Teva Pharmaceutical 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 Teva Pharmaceutical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Teva Pharmaceutical has no effect on the direction of Opko Health i.e., Opko Health and Teva Pharmaceutical go up and down completely randomly.
Pair Corralation between Opko Health and Teva Pharmaceutical
Assuming the 90 days trading horizon Opko Health is expected to under-perform the Teva Pharmaceutical. In addition to that, Opko Health is 1.58 times more volatile than Teva Pharmaceutical Industries. It trades about -0.13 of its total potential returns per unit of risk. Teva Pharmaceutical Industries is currently generating about -0.04 per unit of volatility. If you would invest 608,200 in Teva Pharmaceutical Industries on September 18, 2024 and sell it today you would lose (12,800) from holding Teva Pharmaceutical Industries or give up 2.1% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 94.44% |
| Values | Daily Returns |
Opko Health vs. Teva Pharmaceutical Industries
Performance |
| Timeline |
| Opko Health |
| Teva Pharmaceutical |
Opko Health and Teva Pharmaceutical Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Opko Health and Teva Pharmaceutical
The main advantage of trading using opposite Opko Health and Teva Pharmaceutical positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Opko Health position performs unexpectedly, Teva Pharmaceutical 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 Teva Pharmaceutical will offset losses from the drop in Teva Pharmaceutical's long position.| Opko Health vs. Teva Pharmaceutical Industries | Opko Health vs. Tower Semiconductor | Opko Health vs. Nice | Opko Health vs. Kamada |
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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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.
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