Correlation Between SECOM and OPKO HEALTH
Can any of the company-specific risk be diversified away by investing in both SECOM and OPKO HEALTH 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 SECOM and OPKO HEALTH into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between SECOM LTD and OPKO HEALTH, you can compare the effects of market volatilities on SECOM and OPKO HEALTH 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 SECOM with a short position of OPKO HEALTH. Check out your portfolio center. Please also check ongoing floating volatility patterns of SECOM and OPKO HEALTH.
Diversification Opportunities for SECOM and OPKO HEALTH
-0.05 | Correlation Coefficient |
Good diversification
The 3 months correlation between SECOM and OPKO is -0.05. Overlapping area represents the amount of risk that can be diversified away by holding SECOM LTD and OPKO HEALTH in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on OPKO HEALTH and SECOM 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 SECOM LTD are associated (or correlated) with OPKO HEALTH. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of OPKO HEALTH has no effect on the direction of SECOM i.e., SECOM and OPKO HEALTH go up and down completely randomly.
Pair Corralation between SECOM and OPKO HEALTH
Assuming the 90 days horizon SECOM LTD is expected to generate 1.09 times more return on investment than OPKO HEALTH. However, SECOM is 1.09 times more volatile than OPKO HEALTH. It trades about 0.08 of its potential returns per unit of risk. OPKO HEALTH is currently generating about 0.08 per unit of risk. If you would invest 2,775 in SECOM LTD on November 1, 2024 and sell it today you would earn a total of 445.00 from holding SECOM LTD or generate 16.04% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
SECOM LTD vs. OPKO HEALTH
Performance |
| Timeline |
| SECOM LTD |
| OPKO HEALTH |
SECOM and OPKO HEALTH Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SECOM and OPKO HEALTH
The main advantage of trading using opposite SECOM and OPKO HEALTH positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SECOM position performs unexpectedly, OPKO HEALTH 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 OPKO HEALTH will offset losses from the drop in OPKO HEALTH's long position.| SECOM vs. OPKO HEALTH | SECOM vs. US Physical Therapy | SECOM vs. Tower One Wireless | SECOM vs. CENTURIA OFFICE REIT |
| OPKO HEALTH vs. Benchmark Electronics | OPKO HEALTH vs. Renesas Electronics | OPKO HEALTH vs. Aristocrat Leisure Limited | OPKO HEALTH vs. TRAVEL LEISURE DL 01 |
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 Bonds Directory module to find actively traded corporate debentures issued by US companies.
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