Correlation Between Omkar Speciality and Energy Development

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

By analyzing existing cross correlation between Omkar Speciality Chemicals and Energy Development, you can compare the effects of market volatilities on Omkar Speciality and Energy Development 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 Omkar Speciality with a short position of Energy Development. Check out your portfolio center. Please also check ongoing floating volatility patterns of Omkar Speciality and Energy Development.

Diversification Opportunities for Omkar Speciality and Energy Development

0.7

Correlation Coefficient

Omkar Speciality  Energy Development

Poor diversification

The 3 months correlation between Omkar and Energy is 0.7. Overlapping area represents the amount of risk that can be diversified away by holding Omkar Speciality Chemicals and Energy Development in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Energy Development and Omkar Speciality 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 Omkar Speciality Chemicals are associated (or correlated) with Energy Development. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Energy Development has no effect on the direction of Omkar Speciality i.e., Omkar Speciality and Energy Development go up and down completely randomly.

Pair Corralation between Omkar Speciality and Energy Development

Assuming the 90 days trading horizon Omkar Speciality Chemicals is expected to generate 1.02 times more return on investment than Energy Development. However, Omkar Speciality is 1.02 times more volatile than Energy Development. It trades about -0.12 of its potential returns per unit of risk. Energy Development is currently generating about -0.2 per unit of risk. If you would invest  793.00  in Omkar Speciality Chemicals on December 27, 2024 and sell it today you would lose (188.00) from holding Omkar Speciality Chemicals or give up 23.71% of portfolio value over 90 days.

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

Omkar Speciality Chemicals  vs.  Energy Development

Omkar Speciality Che

Risk-Adjusted Performance

Very Weak

Over the last 90 days Omkar Speciality Chemicals has generated negative risk-adjusted returns adding no value to investors with long positions. Despite inconsistent performance in the last few months, the Stock's technical indicators remain fairly strong which may send shares a bit higher in April 2025. The recent confusion may also be a sign of long-lasting up-swing for the firm traders.

Energy Development

Risk-Adjusted Performance

Very Weak

Over the last 90 days Energy Development has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's fundamental indicators remain rather sound which may send shares a bit higher in April 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Pair Trading with Omkar Speciality and Energy Development

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

The idea behind Omkar Speciality Chemicals and Energy Development 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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..