Correlation Between OPKO HEALTH and Omeros

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

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

Diversification Opportunities for OPKO HEALTH and Omeros

0.71

Correlation Coefficient

OPKO HEALTH  Omeros

Poor diversification

The 3 months correlation between OPKO and Omeros is 0.71. Overlapping area represents the amount of risk that can be diversified away by holding OPKO HEALTH and Omeros in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Omeros 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 Omeros. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Omeros has no effect on the direction of OPKO HEALTH i.e., OPKO HEALTH and Omeros go up and down completely randomly.

Pair Corralation between OPKO HEALTH and Omeros

Assuming the 90 days trading horizon OPKO HEALTH is expected to under-perform the Omeros. But the stock apears to be less risky and, when comparing its historical volatility, OPKO HEALTH is 12.88 times less risky than Omeros. The stock trades about -0.28 of its potential returns per unit of risk. The Omeros is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest  1,009  in Omeros on October 11, 2024 and sell it today you would lose (35.00) from holding Omeros or give up 3.47% of portfolio value over 90 days.

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

OPKO HEALTH  vs.  Omeros

OPKO HEALTH

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in OPKO HEALTH are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, OPKO HEALTH may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Omeros

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Omeros are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Omeros reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with OPKO HEALTH and Omeros

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

The idea behind OPKO HEALTH and Omeros 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 Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.