Correlation Between Option Care and UNIPHAR PLC

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

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

Diversification Opportunities for Option Care and UNIPHAR PLC

0.77

Correlation Coefficient

Option Care  UNIPHAR PLC

Poor diversification

The 3 months correlation between Option and UNIPHAR is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding Option Care Health and UNIPHAR PLC EO in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on UNIPHAR PLC EO and Option Care 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 Option Care Health are associated (or correlated) with UNIPHAR PLC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of UNIPHAR PLC EO has no effect on the direction of Option Care i.e., Option Care and UNIPHAR PLC go up and down completely randomly.

Pair Corralation between Option Care and UNIPHAR PLC

Assuming the 90 days trading horizon Option Care Health is expected to generate 0.66 times more return on investment than UNIPHAR PLC. However, Option Care Health is 1.52 times less risky than UNIPHAR PLC. It trades about 0.24 of its potential returns per unit of risk. UNIPHAR PLC EO is currently generating about 0.15 per unit of risk. If you would invest  2,200  in Option Care Health on December 21, 2024 and sell it today you would earn a total of  940.00  from holding Option Care Health or generate 42.73% return on investment over 90 days.

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

Option Care Health  vs.  UNIPHAR PLC EO

Option Care Health

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Option Care Health are ranked lower than 19 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Option Care reported solid returns over the last few months and may actually be approaching a breakup point.

UNIPHAR PLC EO

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in UNIPHAR PLC EO are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, UNIPHAR PLC reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Option Care and UNIPHAR PLC

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

The idea behind Option Care Health and UNIPHAR PLC EO 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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.