Correlation Between Opko Health and Storage Drop

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

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

Diversification Opportunities for Opko Health and Storage Drop

-0.23

Correlation Coefficient

Opko Health  Storage Drop

Very good diversification

The 3 months correlation between Opko and Storage is -0.23. Overlapping area represents the amount of risk that can be diversified away by holding Opko Health and Storage Drop Storage in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Storage Drop Storage 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 Storage Drop. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Storage Drop Storage has no effect on the direction of Opko Health i.e., Opko Health and Storage Drop go up and down completely randomly.

Pair Corralation between Opko Health and Storage Drop

Assuming the 90 days trading horizon Opko Health is expected to under-perform the Storage Drop. But the stock apears to be less risky and, when comparing its historical volatility, Opko Health is 3.84 times less risky than Storage Drop. The stock trades about -0.1 of its potential returns per unit of risk. The Storage Drop Storage is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest  3,250  in Storage Drop Storage on October 26, 2024 and sell it today you would earn a total of  1,290  from holding Storage Drop Storage or generate 39.69% 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.  Storage Drop Storage

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 somewhat strong forward-looking signals, Opko Health is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Storage Drop Storage

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Storage Drop Storage are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Storage Drop may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Opko Health and Storage Drop

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

The idea behind Opko Health and Storage Drop Storage 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 Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.