Correlation Between Youdao and Omni Health

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

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

Diversification Opportunities for Youdao and Omni Health

0.0

Correlation Coefficient

Youdao  Omni Health

Pay attention - limited upside

The 3 months correlation between Youdao and Omni is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Youdao Inc and Omni Health in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Omni Health and Youdao 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 Youdao Inc are associated (or correlated) with Omni Health. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Omni Health has no effect on the direction of Youdao i.e., Youdao and Omni Health go up and down completely randomly.

Pair Corralation between Youdao and Omni Health

If you would invest  512.00  in Youdao Inc on October 10, 2024 and sell it today you would earn a total of  168.00  from holding Youdao Inc or generate 32.81% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	98.39%
Values	Daily Returns

Youdao Inc  vs.  Omni Health

Youdao Inc

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Youdao Inc are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of very weak basic indicators, Youdao displayed solid returns over the last few months and may actually be approaching a breakup point.

Omni Health

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Omni Health has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound technical indicators, Omni Health is not utilizing all of its potentials. The newest stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Youdao and Omni Health

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

The idea behind Youdao Inc and Omni 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.

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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.