Correlation Between Drinks Americas and Omni Health

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

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

Diversification Opportunities for Drinks Americas and Omni Health

0.0

Correlation Coefficient

Drinks Americas  Omni Health

Pay attention - limited upside

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

Pair Corralation between Drinks Americas and Omni Health

Given the investment horizon of 90 days Drinks Americas is expected to generate 1.11 times less return on investment than Omni Health. In addition to that, Drinks Americas is 1.01 times more volatile than Omni Health. It trades about 0.06 of its total potential returns per unit of risk. Omni Health is currently generating about 0.06 per unit of volatility. If you would invest  0.00  in Omni Health on February 3, 2024 and sell it today you would earn a total of  0.00  from holding Omni Health or generate 9.223372036854776E16% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	99.6%
Values	Daily Returns

Drinks Americas Hldg  vs.  Omni Health

Drinks Americas Hldg

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Drinks Americas Hldg has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unsteady performance in the last few months, the Stock's basic indicators remain very healthy which may send shares a bit higher in June 2024. The recent disarray may also be a sign of long period up-swing for the firm investors.

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 weak technical indicators, Omni Health exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Drinks Americas and Omni Health

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

The idea behind Drinks Americas Hldg and Omni Health 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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.