Correlation Between Udemy and OmniAb

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

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

Diversification Opportunities for Udemy and OmniAb

0.29

Correlation Coefficient

Udemy  OmniAb

Modest diversification

The 3 months correlation between Udemy and OmniAb is 0.29. Overlapping area represents the amount of risk that can be diversified away by holding Udemy Inc and OmniAb Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on OmniAb Inc and Udemy 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 Udemy Inc are associated (or correlated) with OmniAb. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of OmniAb Inc has no effect on the direction of Udemy i.e., Udemy and OmniAb go up and down completely randomly.

Pair Corralation between Udemy and OmniAb

Given the investment horizon of 90 days Udemy is expected to generate 1002.14 times less return on investment than OmniAb. But when comparing it to its historical volatility, Udemy Inc is 31.91 times less risky than OmniAb. It trades about 0.0 of its potential returns per unit of risk. OmniAb Inc is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest  58.00  in OmniAb Inc on October 11, 2024 and sell it today you would lose (26.00) from holding OmniAb Inc or give up 44.83% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	74.34%
Values	Daily Returns

Udemy Inc  vs.  OmniAb Inc

Udemy Inc

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Udemy Inc are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of fairly uncertain primary indicators, Udemy may actually be approaching a critical reversion point that can send shares even higher in February 2025.

OmniAb Inc

Risk-Adjusted Performance

0 of 100

Insignificant

Over the last 90 days OmniAb Inc has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly inconsistent forward indicators, OmniAb showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Udemy and OmniAb

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

The idea behind Udemy Inc and OmniAb 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.

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 Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.