Correlation Between Opko Health and Golan Plastic

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

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

Diversification Opportunities for Opko Health and Golan Plastic

-0.1

Correlation Coefficient

Opko Health  Golan Plastic

Good diversification

The 3 months correlation between Opko and Golan is -0.1. Overlapping area represents the amount of risk that can be diversified away by holding Opko Health and Golan Plastic in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Golan Plastic and Opko Health 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 Opko Health are associated (or correlated) with Golan Plastic. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Golan Plastic has no effect on the direction of Opko Health i.e., Opko Health and Golan Plastic go up and down completely randomly.

Pair Corralation between Opko Health and Golan Plastic

Assuming the 90 days trading horizon Opko Health is expected to under-perform the Golan Plastic. In addition to that, Opko Health is 1.54 times more volatile than Golan Plastic. It trades about -0.03 of its total potential returns per unit of risk. Golan Plastic is currently generating about 0.35 per unit of volatility. If you would invest  93,900  in Golan Plastic on September 13, 2024 and sell it today you would earn a total of  44,100  from holding Golan Plastic or generate 46.96% return on investment over 90 days.

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

Opko Health  vs.  Golan Plastic

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 latest weak performance, the Stock's forward-looking signals remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Golan Plastic

Risk-Adjusted Performance

27 of 100

Strong

Compared to the overall equity markets, risk-adjusted returns on investments in Golan Plastic are ranked lower than 27 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Golan Plastic sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Opko Health and Golan Plastic

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

The idea behind Opko Health and Golan Plastic 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.