Correlation Between Opko Health and Caredx

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

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

Diversification Opportunities for Opko Health and Caredx

-0.28

Correlation Coefficient

Opko Health  Caredx

Very good diversification

The 3 months correlation between Opko and Caredx is -0.28. Overlapping area represents the amount of risk that can be diversified away by holding Opko Health and Caredx Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Caredx Inc 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 Caredx. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Caredx Inc has no effect on the direction of Opko Health i.e., Opko Health and Caredx go up and down completely randomly.

Pair Corralation between Opko Health and Caredx

Considering the 90-day investment horizon Opko Health is expected to generate 0.58 times more return on investment than Caredx. However, Opko Health is 1.74 times less risky than Caredx. It trades about -0.19 of its potential returns per unit of risk. Caredx Inc is currently generating about -0.18 per unit of risk. If you would invest  157.00  in Opko Health on October 6, 2024 and sell it today you would lose (9.00) from holding Opko Health or give up 5.73% of portfolio value over 90 days.

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

Opko Health  vs.  Caredx Inc

Opko Health

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Opko Health are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite quite persistent basic indicators, Opko Health is not utilizing all of its potentials. The current stock price mess, may contribute to short-term losses for the institutional investors.

Caredx Inc

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Opko Health and Caredx

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

The idea behind Opko Health and Caredx Inc 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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.