Correlation Between Omega Healthcare and CompuGroup Medical

Can any of the company-specific risk be diversified away by investing in both Omega Healthcare and CompuGroup Medical 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 CompuGroup Medical 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 CompuGroup Medical AG, you can compare the effects of market volatilities on Omega Healthcare and CompuGroup Medical 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 CompuGroup Medical. Check out your portfolio center. Please also check ongoing floating volatility patterns of Omega Healthcare and CompuGroup Medical.

Diversification Opportunities for Omega Healthcare and CompuGroup Medical

0.13

Correlation Coefficient

Omega Healthcare  CompuGroup Medical

Average diversification

The 3 months correlation between Omega and CompuGroup is 0.13. Overlapping area represents the amount of risk that can be diversified away by holding Omega Healthcare Investors and CompuGroup Medical AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CompuGroup Medical 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 CompuGroup Medical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CompuGroup Medical has no effect on the direction of Omega Healthcare i.e., Omega Healthcare and CompuGroup Medical go up and down completely randomly.

Pair Corralation between Omega Healthcare and CompuGroup Medical

Assuming the 90 days trading horizon Omega Healthcare Investors is expected to generate 0.43 times more return on investment than CompuGroup Medical. However, Omega Healthcare Investors is 2.31 times less risky than CompuGroup Medical. It trades about 0.1 of its potential returns per unit of risk. CompuGroup Medical AG is currently generating about -0.07 per unit of risk. If you would invest  2,876  in Omega Healthcare Investors on September 4, 2024 and sell it today you would earn a total of  1,081  from holding Omega Healthcare Investors or generate 37.59% return on investment over 90 days.

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

Omega Healthcare Investors  vs.  CompuGroup Medical AG

Omega Healthcare Inv

Risk-Adjusted Performance

1 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Omega Healthcare Investors are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, Omega Healthcare is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

CompuGroup Medical

Risk-Adjusted Performance

7 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in CompuGroup Medical AG are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, CompuGroup Medical unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Omega Healthcare and CompuGroup Medical

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

The idea behind Omega Healthcare Investors and CompuGroup Medical AG 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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.