Correlation Between Opko Health and Aerodrome

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

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

Diversification Opportunities for Opko Health and Aerodrome

-0.05

Correlation Coefficient

Opko Health  Aerodrome

Good diversification

The 3 months correlation between Opko and Aerodrome is -0.05. Overlapping area represents the amount of risk that can be diversified away by holding Opko Health and Aerodrome Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aerodrome Group 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 Aerodrome. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aerodrome Group has no effect on the direction of Opko Health i.e., Opko Health and Aerodrome go up and down completely randomly.

Pair Corralation between Opko Health and Aerodrome

Assuming the 90 days trading horizon Opko Health is expected to generate 34.79 times less return on investment than Aerodrome. But when comparing it to its historical volatility, Opko Health is 3.85 times less risky than Aerodrome. It trades about 0.02 of its potential returns per unit of risk. Aerodrome Group is currently generating about 0.15 of returns per unit of risk over similar time horizon. If you would invest  3,760  in Aerodrome Group on September 12, 2024 and sell it today you would earn a total of  3,610  from holding Aerodrome Group or generate 96.01% return on investment over 90 days.

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

Opko Health  vs.  Aerodrome Group

Opko Health

Risk-Adjusted Performance

1 of 100

Very Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Opko Health are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong forward-looking signals, Opko Health is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Aerodrome Group

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Aerodrome Group are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Aerodrome sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Opko Health and Aerodrome

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

The idea behind Opko Health and Aerodrome Group 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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.