Correlation Between LUMENT FINANCE and OPKO HEALTH

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

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

Diversification Opportunities for LUMENT FINANCE and OPKO HEALTH

0.19

Correlation Coefficient

LUMENT FINANCE  OPKO HEALTH

Average diversification

The 3 months correlation between LUMENT and OPKO is 0.19. Overlapping area represents the amount of risk that can be diversified away by holding LUMENT FINANCE TR and OPKO HEALTH in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on OPKO HEALTH and LUMENT FINANCE 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 LUMENT FINANCE TR are associated (or correlated) with OPKO HEALTH. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of OPKO HEALTH has no effect on the direction of LUMENT FINANCE i.e., LUMENT FINANCE and OPKO HEALTH go up and down completely randomly.

Pair Corralation between LUMENT FINANCE and OPKO HEALTH

Assuming the 90 days horizon LUMENT FINANCE TR is expected to generate 1.93 times more return on investment than OPKO HEALTH. However, LUMENT FINANCE is 1.93 times more volatile than OPKO HEALTH. It trades about 0.07 of its potential returns per unit of risk. OPKO HEALTH is currently generating about 0.11 per unit of risk. If you would invest  220.00  in LUMENT FINANCE TR on October 27, 2024 and sell it today you would earn a total of  22.00  from holding LUMENT FINANCE TR or generate 10.0% return on investment over 90 days.

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

LUMENT FINANCE TR  vs.  OPKO HEALTH

LUMENT FINANCE TR

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in LUMENT FINANCE TR are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, LUMENT FINANCE may actually be approaching a critical reversion point that can send shares even higher in February 2025.

OPKO HEALTH

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in OPKO HEALTH are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, OPKO HEALTH may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with LUMENT FINANCE and OPKO HEALTH

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

The idea behind LUMENT FINANCE TR and OPKO HEALTH 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 Stocks Directory module to find actively traded stocks across global markets.