Correlation Between Opal Balance and Ilex Medical

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

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

Diversification Opportunities for Opal Balance and Ilex Medical

-0.65

Correlation Coefficient

Opal Balance  Ilex Medical

Excellent diversification

The 3 months correlation between Opal and Ilex is -0.65. Overlapping area represents the amount of risk that can be diversified away by holding Opal Balance and Ilex Medical in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ilex Medical and Opal Balance 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 Opal Balance are associated (or correlated) with Ilex Medical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ilex Medical has no effect on the direction of Opal Balance i.e., Opal Balance and Ilex Medical go up and down completely randomly.

Pair Corralation between Opal Balance and Ilex Medical

Assuming the 90 days trading horizon Opal Balance is expected to generate 0.98 times more return on investment than Ilex Medical. However, Opal Balance is 1.02 times less risky than Ilex Medical. It trades about 0.09 of its potential returns per unit of risk. Ilex Medical is currently generating about -0.1 per unit of risk. If you would invest  21,548  in Opal Balance on December 29, 2024 and sell it today you would earn a total of  1,942  from holding Opal Balance or generate 9.01% return on investment over 90 days.

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

Opal Balance  vs.  Ilex Medical

Opal Balance

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Opal Balance are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Opal Balance may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Ilex Medical

Risk-Adjusted Performance

Very Weak

Over the last 90 days Ilex Medical has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain somewhat strong which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with Opal Balance and Ilex Medical

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

The idea behind Opal Balance and Ilex Medical 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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.