Correlation Between Omeros and Suzano SA

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

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

Diversification Opportunities for Omeros and Suzano SA

0.72

Correlation Coefficient

Omeros  Suzano SA

Poor diversification

The 3 months correlation between Omeros and Suzano is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding Omeros and Suzano SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Suzano SA and Omeros 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 Omeros are associated (or correlated) with Suzano SA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Suzano SA has no effect on the direction of Omeros i.e., Omeros and Suzano SA go up and down completely randomly.

Pair Corralation between Omeros and Suzano SA

Assuming the 90 days horizon Omeros is expected to generate 8.2 times more return on investment than Suzano SA. However, Omeros is 8.2 times more volatile than Suzano SA. It trades about 0.22 of its potential returns per unit of risk. Suzano SA is currently generating about 0.13 per unit of risk. If you would invest  401.00  in Omeros on September 15, 2024 and sell it today you would earn a total of  318.00  from holding Omeros or generate 79.3% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	100.0%
Values	Daily Returns

Omeros  vs.  Suzano SA

Omeros

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Omeros are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Omeros reported solid returns over the last few months and may actually be approaching a breakup point.

Suzano SA

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Suzano SA are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Suzano SA reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Omeros and Suzano SA

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

The idea behind Omeros and Suzano SA 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 File Import module to quickly import all of your third-party portfolios from your local drive in csv format.