Correlation Between United Orthopedic and Ok Biotech

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

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

Diversification Opportunities for United Orthopedic and Ok Biotech

0.64

Correlation Coefficient

United Orthopedic  Ok Biotech

Poor diversification

The 3 months correlation between United and 4155 is 0.64. Overlapping area represents the amount of risk that can be diversified away by holding United Orthopedic and Ok Biotech Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ok Biotech and United Orthopedic 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 United Orthopedic are associated (or correlated) with Ok Biotech. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ok Biotech has no effect on the direction of United Orthopedic i.e., United Orthopedic and Ok Biotech go up and down completely randomly.

Pair Corralation between United Orthopedic and Ok Biotech

Assuming the 90 days trading horizon United Orthopedic is expected to generate 0.62 times more return on investment than Ok Biotech. However, United Orthopedic is 1.61 times less risky than Ok Biotech. It trades about -0.1 of its potential returns per unit of risk. Ok Biotech Co is currently generating about -0.34 per unit of risk. If you would invest  9,320  in United Orthopedic on October 16, 2024 and sell it today you would lose (130.00) from holding United Orthopedic or give up 1.39% of portfolio value over 90 days.

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

United Orthopedic  vs.  Ok Biotech Co

United Orthopedic

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days United Orthopedic has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable basic indicators, United Orthopedic is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Ok Biotech

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Ok Biotech Co has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of abnormal performance in the last few months, the Stock's basic indicators remain fairly stable which may send shares a bit higher in February 2025. The latest fuss may also be a sign of long-term up-swing for the venture sophisticated investors.

Pair Trading with United Orthopedic and Ok Biotech

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

The idea behind United Orthopedic and Ok Biotech 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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.