Correlation Between Volaris and Oasmia Pharmaceutical

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

By analyzing existing cross correlation between Volaris and Oasmia Pharmaceutical AB, you can compare the effects of market volatilities on Volaris and Oasmia Pharmaceutical 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 Volaris with a short position of Oasmia Pharmaceutical. Check out your portfolio center. Please also check ongoing floating volatility patterns of Volaris and Oasmia Pharmaceutical.

Diversification Opportunities for Volaris and Oasmia Pharmaceutical

-0.33

Correlation Coefficient

Volaris  Oasmia Pharmaceutical

Very good diversification

The 3 months correlation between Volaris and Oasmia is -0.33. Overlapping area represents the amount of risk that can be diversified away by holding Volaris and Oasmia Pharmaceutical AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Oasmia Pharmaceutical and Volaris 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 Volaris are associated (or correlated) with Oasmia Pharmaceutical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Oasmia Pharmaceutical has no effect on the direction of Volaris i.e., Volaris and Oasmia Pharmaceutical go up and down completely randomly.

Pair Corralation between Volaris and Oasmia Pharmaceutical

Given the investment horizon of 90 days Volaris is expected to generate 55.92 times less return on investment than Oasmia Pharmaceutical. But when comparing it to its historical volatility, Volaris is 9.18 times less risky than Oasmia Pharmaceutical. It trades about 0.02 of its potential returns per unit of risk. Oasmia Pharmaceutical AB is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest  5.00  in Oasmia Pharmaceutical AB on September 18, 2024 and sell it today you would earn a total of  1.00  from holding Oasmia Pharmaceutical AB or generate 20.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	5.85%
Values	Daily Returns

Volaris  vs.  Oasmia Pharmaceutical AB

Volaris

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Volaris are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak basic indicators, Volaris unveiled solid returns over the last few months and may actually be approaching a breakup point.

Oasmia Pharmaceutical

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Oasmia Pharmaceutical AB has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong primary indicators, Oasmia Pharmaceutical is not utilizing all of its potentials. The newest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Volaris and Oasmia Pharmaceutical

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

The idea behind Volaris and Oasmia Pharmaceutical AB 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 Portfolio Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.