Correlation Between Omega Healthcare and THRACE PLASTICS

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

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

Diversification Opportunities for Omega Healthcare and THRACE PLASTICS

0.33

Correlation Coefficient

Omega Healthcare  THRACE PLASTICS

Weak diversification

The 3 months correlation between Omega and THRACE is 0.33. Overlapping area represents the amount of risk that can be diversified away by holding Omega Healthcare Investors and THRACE PLASTICS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on THRACE PLASTICS and Omega Healthcare 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 Omega Healthcare Investors are associated (or correlated) with THRACE PLASTICS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of THRACE PLASTICS has no effect on the direction of Omega Healthcare i.e., Omega Healthcare and THRACE PLASTICS go up and down completely randomly.

Pair Corralation between Omega Healthcare and THRACE PLASTICS

Assuming the 90 days horizon Omega Healthcare Investors is expected to generate 1.28 times more return on investment than THRACE PLASTICS. However, Omega Healthcare is 1.28 times more volatile than THRACE PLASTICS. It trades about 0.09 of its potential returns per unit of risk. THRACE PLASTICS is currently generating about 0.0 per unit of risk. If you would invest  2,585  in Omega Healthcare Investors on October 9, 2024 and sell it today you would earn a total of  1,009  from holding Omega Healthcare Investors or generate 39.03% return on investment over 90 days.

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

Omega Healthcare Investors  vs.  THRACE PLASTICS

Omega Healthcare Inv

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Omega Healthcare Investors are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, Omega Healthcare is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

THRACE PLASTICS

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in THRACE PLASTICS are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of rather fragile basic indicators, THRACE PLASTICS may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Omega Healthcare and THRACE PLASTICS

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

The idea behind Omega Healthcare Investors and THRACE PLASTICS 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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.