Correlation Between Deneb Investments and Omnia Holdings

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

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

Diversification Opportunities for Deneb Investments and Omnia Holdings

0.69

Correlation Coefficient

Deneb Investments  Omnia Holdings

Poor diversification

The 3 months correlation between Deneb and Omnia is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding Deneb Investments and Omnia Holdings Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Omnia Holdings and Deneb Investments 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 Deneb Investments are associated (or correlated) with Omnia Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Omnia Holdings has no effect on the direction of Deneb Investments i.e., Deneb Investments and Omnia Holdings go up and down completely randomly.

Pair Corralation between Deneb Investments and Omnia Holdings

Assuming the 90 days trading horizon Deneb Investments is expected to generate 3.46 times less return on investment than Omnia Holdings. In addition to that, Deneb Investments is 1.94 times more volatile than Omnia Holdings Limited. It trades about 0.03 of its total potential returns per unit of risk. Omnia Holdings Limited is currently generating about 0.19 per unit of volatility. If you would invest  632,300  in Omnia Holdings Limited on September 3, 2024 and sell it today you would earn a total of  96,800  from holding Omnia Holdings Limited or generate 15.31% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	98.44%
Values	Daily Returns

Deneb Investments  vs.  Omnia Holdings Limited

Deneb Investments

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Deneb Investments are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound technical and fundamental indicators, Deneb Investments is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Omnia Holdings

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Omnia Holdings Limited are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady technical and fundamental indicators, Omnia Holdings exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Deneb Investments and Omnia Holdings

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

The idea behind Deneb Investments and Omnia Holdings Limited 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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.