Correlation Between OBI Pharma and Interactive Digital

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

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

Diversification Opportunities for OBI Pharma and Interactive Digital

0.31

Correlation Coefficient

OBI Pharma  Interactive Digital

Weak diversification

The 3 months correlation between OBI and Interactive is 0.31. Overlapping area represents the amount of risk that can be diversified away by holding OBI Pharma and Interactive Digital Technologi in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Interactive Digital and OBI Pharma 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 OBI Pharma are associated (or correlated) with Interactive Digital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Interactive Digital has no effect on the direction of OBI Pharma i.e., OBI Pharma and Interactive Digital go up and down completely randomly.

Pair Corralation between OBI Pharma and Interactive Digital

Assuming the 90 days trading horizon OBI Pharma is expected to generate 2.55 times more return on investment than Interactive Digital. However, OBI Pharma is 2.55 times more volatile than Interactive Digital Technologies. It trades about 0.09 of its potential returns per unit of risk. Interactive Digital Technologies is currently generating about 0.16 per unit of risk. If you would invest  5,720  in OBI Pharma on December 25, 2024 and sell it today you would earn a total of  470.00  from holding OBI Pharma or generate 8.22% return on investment over 90 days.

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

OBI Pharma  vs.  Interactive Digital Technologi

OBI Pharma

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in OBI Pharma are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, OBI Pharma may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Interactive Digital

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Interactive Digital Technologies are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Interactive Digital may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with OBI Pharma and Interactive Digital

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

The idea behind OBI Pharma and Interactive Digital Technologies 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 Portfolio Center module to all portfolio management and optimization tools to improve performance of your portfolios.