Correlation Between Omega Healthcare and AcadeMedia

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

Diversification Opportunities for Omega Healthcare and AcadeMedia

0.01

Correlation Coefficient

Omega Healthcare  AcadeMedia

Significant diversification

The 3 months correlation between Omega and AcadeMedia is 0.01. Overlapping area represents the amount of risk that can be diversified away by holding Omega Healthcare Investors and AcadeMedia AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AcadeMedia AB 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 AcadeMedia. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AcadeMedia AB has no effect on the direction of Omega Healthcare i.e., Omega Healthcare and AcadeMedia go up and down completely randomly.

Pair Corralation between Omega Healthcare and AcadeMedia

Assuming the 90 days trading horizon Omega Healthcare Investors is expected to under-perform the AcadeMedia. In addition to that, Omega Healthcare is 1.29 times more volatile than AcadeMedia AB. It trades about 0.0 of its total potential returns per unit of risk. AcadeMedia AB is currently generating about 0.23 per unit of volatility. If you would invest  6,735  in AcadeMedia AB on December 25, 2024 and sell it today you would earn a total of  1,435  from holding AcadeMedia AB or generate 21.31% 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.  AcadeMedia AB

Omega Healthcare Inv

Risk-Adjusted Performance

Very Weak

Over the last 90 days Omega Healthcare Investors has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Omega Healthcare is not utilizing all of its potentials. The latest stock price uproar, may contribute to short-horizon losses for the private investors.

AcadeMedia AB

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in AcadeMedia AB are ranked lower than 18 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unsteady basic indicators, AcadeMedia unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Omega Healthcare and AcadeMedia

The main advantage of trading using opposite Omega Healthcare and AcadeMedia positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Omega Healthcare position performs unexpectedly, AcadeMedia 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 AcadeMedia will offset losses from the drop in AcadeMedia's long position.

The idea behind Omega Healthcare Investors and AcadeMedia AB 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.

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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.