Correlation Between OPKO HEALTH and MERCEDES BENZ

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

By analyzing existing cross correlation between OPKO HEALTH and MERCEDES BENZ GRP ADR14, you can compare the effects of market volatilities on OPKO HEALTH and MERCEDES BENZ 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 MERCEDES BENZ. Check out your portfolio center. Please also check ongoing floating volatility patterns of OPKO HEALTH and MERCEDES BENZ.

Diversification Opportunities for OPKO HEALTH and MERCEDES BENZ

-0.68

Correlation Coefficient

OPKO HEALTH  MERCEDES BENZ

Excellent diversification

The 3 months correlation between OPKO and MERCEDES is -0.68. Overlapping area represents the amount of risk that can be diversified away by holding OPKO HEALTH and MERCEDES BENZ GRP ADR14 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MERCEDES BENZ GRP 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 MERCEDES BENZ. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MERCEDES BENZ GRP has no effect on the direction of OPKO HEALTH i.e., OPKO HEALTH and MERCEDES BENZ go up and down completely randomly.

Pair Corralation between OPKO HEALTH and MERCEDES BENZ

Assuming the 90 days trading horizon OPKO HEALTH is expected to under-perform the MERCEDES BENZ. But the stock apears to be less risky and, when comparing its historical volatility, OPKO HEALTH is 3.53 times less risky than MERCEDES BENZ. The stock trades about -0.09 of its potential returns per unit of risk. The MERCEDES BENZ GRP ADR14 is currently generating about 0.19 of returns per unit of risk over similar time horizon. If you would invest  1,290  in MERCEDES BENZ GRP ADR14 on October 25, 2024 and sell it today you would earn a total of  130.00  from holding MERCEDES BENZ GRP ADR14 or generate 10.08% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	94.44%
Values	Daily Returns

OPKO HEALTH  vs.  MERCEDES BENZ GRP ADR14

OPKO HEALTH

Risk-Adjusted Performance

8 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in OPKO HEALTH are ranked lower than 8 (%) 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.

MERCEDES BENZ GRP

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in MERCEDES BENZ GRP ADR14 are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable forward indicators, MERCEDES BENZ is not utilizing all of its potentials. The newest stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with OPKO HEALTH and MERCEDES BENZ

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

The idea behind OPKO HEALTH and MERCEDES BENZ GRP ADR14 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 Bonds Directory module to find actively traded corporate debentures issued by US companies.