Correlation Between OLIPASS and Prestige Biologics

Can any of the company-specific risk be diversified away by investing in both OLIPASS and Prestige Biologics 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 OLIPASS and Prestige Biologics into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between OLIPASS and Prestige Biologics Co, you can compare the effects of market volatilities on OLIPASS and Prestige Biologics 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 OLIPASS with a short position of Prestige Biologics. Check out your portfolio center. Please also check ongoing floating volatility patterns of OLIPASS and Prestige Biologics.

Diversification Opportunities for OLIPASS and Prestige Biologics

0.08

Correlation Coefficient

OLIPASS  Prestige Biologics

Significant diversification

The 3 months correlation between OLIPASS and Prestige is 0.08. Overlapping area represents the amount of risk that can be diversified away by holding OLIPASS and Prestige Biologics Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Prestige Biologics and OLIPASS 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 OLIPASS are associated (or correlated) with Prestige Biologics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Prestige Biologics has no effect on the direction of OLIPASS i.e., OLIPASS and Prestige Biologics go up and down completely randomly.

Pair Corralation between OLIPASS and Prestige Biologics

Assuming the 90 days trading horizon OLIPASS is expected to under-perform the Prestige Biologics. In addition to that, OLIPASS is 1.69 times more volatile than Prestige Biologics Co. It trades about -0.05 of its total potential returns per unit of risk. Prestige Biologics Co is currently generating about 0.05 per unit of volatility. If you would invest  301,500  in Prestige Biologics Co on October 4, 2024 and sell it today you would earn a total of  207,500  from holding Prestige Biologics Co or generate 68.82% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	96.67%
Values	Daily Returns

OLIPASS  vs.  Prestige Biologics Co

OLIPASS

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in OLIPASS are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, OLIPASS sustained solid returns over the last few months and may actually be approaching a breakup point.

Prestige Biologics

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Prestige Biologics Co has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Pair Trading with OLIPASS and Prestige Biologics

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

The idea behind OLIPASS and Prestige Biologics Co 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 Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.