Correlation Between Electreon Wireless and Opko Health

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

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

Diversification Opportunities for Electreon Wireless and Opko Health

-0.05

Correlation Coefficient

Electreon Wireless  Opko Health

Good diversification

The 3 months correlation between Electreon and Opko is -0.05. Overlapping area represents the amount of risk that can be diversified away by holding Electreon Wireless and Opko Health in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Opko Health and Electreon Wireless 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 Electreon Wireless 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 Electreon Wireless i.e., Electreon Wireless and Opko Health go up and down completely randomly.

Pair Corralation between Electreon Wireless and Opko Health

Assuming the 90 days trading horizon Electreon Wireless is expected to generate 2.03 times less return on investment than Opko Health. In addition to that, Electreon Wireless is 1.03 times more volatile than Opko Health. It trades about 0.0 of its total potential returns per unit of risk. Opko Health is currently generating about 0.01 per unit of volatility. If you would invest  53,580  in Opko Health on October 24, 2024 and sell it today you would lose (760.00) from holding Opko Health or give up 1.42% of portfolio value over 90 days.

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

Electreon Wireless  vs.  Opko Health

Electreon Wireless

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Electreon Wireless has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Electreon Wireless is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Opko Health

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Opko Health has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong forward-looking signals, Opko Health is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Electreon Wireless and Opko Health

The main advantage of trading using opposite Electreon Wireless and Opko Health positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Electreon Wireless 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 Electreon Wireless 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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.