Correlation Between GSTechnologies and Omega Healthcare

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Can any of the company-specific risk be diversified away by investing in both GSTechnologies and Omega Healthcare 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 GSTechnologies and Omega Healthcare into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between GSTechnologies and Omega Healthcare Investors, you can compare the effects of market volatilities on GSTechnologies and Omega Healthcare 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 GSTechnologies with a short position of Omega Healthcare. Check out your portfolio center. Please also check ongoing floating volatility patterns of GSTechnologies and Omega Healthcare.

Diversification Opportunities for GSTechnologies and Omega Healthcare

-0.56
  Correlation Coefficient

Excellent diversification

The 3 months correlation between GSTechnologies and Omega is -0.56. Overlapping area represents the amount of risk that can be diversified away by holding GSTechnologies and Omega Healthcare Investors in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Omega Healthcare Inv and GSTechnologies 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 GSTechnologies are associated (or correlated) with Omega Healthcare. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Omega Healthcare Inv has no effect on the direction of GSTechnologies i.e., GSTechnologies and Omega Healthcare go up and down completely randomly.

Pair Corralation between GSTechnologies and Omega Healthcare

Assuming the 90 days trading horizon GSTechnologies is expected to generate 4.56 times more return on investment than Omega Healthcare. However, GSTechnologies is 4.56 times more volatile than Omega Healthcare Investors. It trades about 0.08 of its potential returns per unit of risk. Omega Healthcare Investors is currently generating about 0.09 per unit of risk. If you would invest  133.00  in GSTechnologies on October 5, 2024 and sell it today you would earn a total of  157.00  from holding GSTechnologies or generate 118.05% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthVery Weak
Accuracy99.63%
ValuesDaily Returns

GSTechnologies  vs.  Omega Healthcare Investors

 Performance 
       Timeline  
GSTechnologies 

Risk-Adjusted Performance

28 of 100

 
Weak
 
Strong
Strong
Compared to the overall equity markets, risk-adjusted returns on investments in GSTechnologies are ranked lower than 28 (%) of all global equities and portfolios over the last 90 days. In spite of rather uncertain technical and fundamental indicators, GSTechnologies exhibited solid returns over the last few months and may actually be approaching a breakup point.
Omega Healthcare Inv 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days Omega Healthcare Investors has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Omega Healthcare is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

GSTechnologies and Omega Healthcare Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with GSTechnologies and Omega Healthcare

The main advantage of trading using opposite GSTechnologies and Omega Healthcare positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GSTechnologies position performs unexpectedly, Omega Healthcare 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 Omega Healthcare will offset losses from the drop in Omega Healthcare's long position.
The idea behind GSTechnologies and Omega Healthcare Investors 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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.

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