Correlation Between Industrivarden and Optima Health
Can any of the company-specific risk be diversified away by investing in both Industrivarden and Optima 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 Industrivarden and Optima Health into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Industrivarden AB ser and Optima Health plc, you can compare the effects of market volatilities on Industrivarden and Optima 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 Industrivarden with a short position of Optima Health. Check out your portfolio center. Please also check ongoing floating volatility patterns of Industrivarden and Optima Health.
Diversification Opportunities for Industrivarden and Optima Health
-0.2 | Correlation Coefficient |
Good diversification
The 3 months correlation between Industrivarden and Optima is -0.2. Overlapping area represents the amount of risk that can be diversified away by holding Industrivarden AB ser and Optima Health plc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Optima Health plc and Industrivarden 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 Industrivarden AB ser are associated (or correlated) with Optima Health. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Optima Health plc has no effect on the direction of Industrivarden i.e., Industrivarden and Optima Health go up and down completely randomly.
Pair Corralation between Industrivarden and Optima Health
Assuming the 90 days trading horizon Industrivarden AB ser is expected to generate 1.64 times more return on investment than Optima Health. However, Industrivarden is 1.64 times more volatile than Optima Health plc. It trades about -0.09 of its potential returns per unit of risk. Optima Health plc is currently generating about -0.29 per unit of risk. If you would invest 36,620 in Industrivarden AB ser on September 1, 2024 and sell it today you would lose (850.00) from holding Industrivarden AB ser or give up 2.32% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 95.65% |
| Values | Daily Returns |
Industrivarden AB ser vs. Optima Health plc
Performance |
| Timeline |
| Industrivarden AB ser |
| Optima Health plc |
Industrivarden and Optima Health Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Industrivarden and Optima Health
The main advantage of trading using opposite Industrivarden and Optima Health positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Industrivarden position performs unexpectedly, Optima 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 Optima Health will offset losses from the drop in Optima Health's long position.| Industrivarden vs. Optima Health plc | Industrivarden vs. Ashtead Technology Holdings | Industrivarden vs. Spire Healthcare Group | Industrivarden vs. X FAB Silicon Foundries |
| Optima Health vs. Trainline Plc | Optima Health vs. Allianz Technology Trust | Optima Health vs. Sabien Technology Group | Optima Health vs. Gaztransport et Technigaz |
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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.
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