Correlation Between Opko Health and Bazan Oil
Can any of the company-specific risk be diversified away by investing in both Opko Health and Bazan Oil 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 Bazan Oil into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Opko Health and Bazan Oil Refineries, you can compare the effects of market volatilities on Opko Health and Bazan Oil 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 Bazan Oil. Check out your portfolio center. Please also check ongoing floating volatility patterns of Opko Health and Bazan Oil.
Diversification Opportunities for Opko Health and Bazan Oil
-0.57 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Opko and Bazan is -0.57. Overlapping area represents the amount of risk that can be diversified away by holding Opko Health and Bazan Oil Refineries in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bazan Oil Refineries 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 Bazan Oil. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bazan Oil Refineries has no effect on the direction of Opko Health i.e., Opko Health and Bazan Oil go up and down completely randomly.
Pair Corralation between Opko Health and Bazan Oil
Assuming the 90 days trading horizon Opko Health is expected to generate 2.2 times more return on investment than Bazan Oil. However, Opko Health is 2.2 times more volatile than Bazan Oil Refineries. It trades about 0.24 of its potential returns per unit of risk. Bazan Oil Refineries is currently generating about -0.32 per unit of risk. If you would invest 39,730 in Opko Health on January 27, 2024 and sell it today you would earn a total of 6,320 from holding Opko Health or generate 15.91% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Opko Health vs. Bazan Oil Refineries
Performance |
| Timeline |
| Opko Health |
| Bazan Oil Refineries |
Opko Health and Bazan Oil Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Opko Health and Bazan Oil
The main advantage of trading using opposite Opko Health and Bazan Oil positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Opko Health position performs unexpectedly, Bazan Oil 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 Bazan Oil will offset losses from the drop in Bazan Oil's long position.| Opko Health vs. Teva Pharmaceutical Industries | Opko Health vs. Tower Semiconductor | Opko Health vs. Nice | Opko Health vs. Kamada |
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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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.
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