Correlation Between Omni Health and Plum Acquisition

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

By analyzing existing cross correlation between Omni Health and Plum Acquisition Corp, you can compare the effects of market volatilities on Omni Health and Plum Acquisition 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 Omni Health with a short position of Plum Acquisition. Check out your portfolio center. Please also check ongoing floating volatility patterns of Omni Health and Plum Acquisition.

Diversification Opportunities for Omni Health and Plum Acquisition

0.0

Correlation Coefficient

Omni Health  Plum Acquisition

Pay attention - limited upside

The 3 months correlation between Omni and Plum is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Omni Health and Plum Acquisition Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Plum Acquisition Corp and Omni 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 Omni Health are associated (or correlated) with Plum Acquisition. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Plum Acquisition Corp has no effect on the direction of Omni Health i.e., Omni Health and Plum Acquisition go up and down completely randomly.

Pair Corralation between Omni Health and Plum Acquisition

If you would invest  1,110  in Plum Acquisition Corp on September 24, 2024 and sell it today you would earn a total of  0.00  from holding Plum Acquisition Corp or generate 0.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	95.0%
Values	Daily Returns

Omni Health  vs.  Plum Acquisition Corp

Omni Health

Risk-Adjusted Performance

9 of 100

Very Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Omni Health are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of rather uncertain technical indicators, Omni Health exhibited solid returns over the last few months and may actually be approaching a breakup point.

Plum Acquisition Corp

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Plum Acquisition Corp are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Even with relatively steady primary indicators, Plum Acquisition is not utilizing all of its potentials. The latest stock price chaos, may contribute to medium-term losses for the stakeholders.

Pair Trading with Omni Health and Plum Acquisition

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

The idea behind Omni Health and Plum Acquisition Corp 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 Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.