Correlation Between Twin Disc and Omega Flex

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

By analyzing existing cross correlation between Twin Disc Incorporated and Omega Flex, you can compare the effects of market volatilities on Twin Disc and Omega Flex 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 Twin Disc with a short position of Omega Flex. Check out your portfolio center. Please also check ongoing floating volatility patterns of Twin Disc and Omega Flex.

Diversification Opportunities for Twin Disc and Omega Flex

-0.03

Correlation Coefficient

Twin Disc  Omega Flex

Good diversification

The 3 months correlation between Twin and Omega is -0.03. Overlapping area represents the amount of risk that can be diversified away by holding Twin Disc Incorporated and Omega Flex in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Omega Flex and Twin Disc 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 Twin Disc Incorporated are associated (or correlated) with Omega Flex. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Omega Flex has no effect on the direction of Twin Disc i.e., Twin Disc and Omega Flex go up and down completely randomly.

Pair Corralation between Twin Disc and Omega Flex

Given the investment horizon of 90 days Twin Disc Incorporated is expected to generate 1.44 times more return on investment than Omega Flex. However, Twin Disc is 1.44 times more volatile than Omega Flex. It trades about -0.02 of its potential returns per unit of risk. Omega Flex is currently generating about -0.09 per unit of risk. If you would invest  1,501  in Twin Disc Incorporated on February 20, 2024 and sell it today you would lose (72.00) from holding Twin Disc Incorporated or give up 4.8% of portfolio value over 90 days.

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

Twin Disc Incorporated  vs.  Omega Flex

Twin Disc

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Twin Disc Incorporated has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy forward indicators, Twin Disc is not utilizing all of its potentials. The current stock price disarray, may contribute to short-term losses for the investors.

Omega Flex

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Omega Flex has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest abnormal performance, the Stock's essential indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Pair Trading with Twin Disc and Omega Flex

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

The idea behind Twin Disc Incorporated and Omega Flex 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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..