Correlation Between Creo Medical and Optima Health
Can any of the company-specific risk be diversified away by investing in both Creo Medical 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 Creo Medical and Optima Health into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Creo Medical Group and Optima Health plc, you can compare the effects of market volatilities on Creo Medical 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 Creo Medical with a short position of Optima Health. Check out your portfolio center. Please also check ongoing floating volatility patterns of Creo Medical and Optima Health.
Diversification Opportunities for Creo Medical and Optima Health
-0.35 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Creo and Optima is -0.35. Overlapping area represents the amount of risk that can be diversified away by holding Creo Medical Group 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 Creo Medical 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 Creo Medical Group 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 Creo Medical i.e., Creo Medical and Optima Health go up and down completely randomly.
Pair Corralation between Creo Medical and Optima Health
Assuming the 90 days trading horizon Creo Medical Group is expected to under-perform the Optima Health. In addition to that, Creo Medical is 3.66 times more volatile than Optima Health plc. It trades about -0.42 of its total potential returns per unit of risk. Optima Health plc is currently generating about -0.23 per unit of volatility. If you would invest 16,200 in Optima Health plc on August 30, 2024 and sell it today you would lose (500.00) from holding Optima Health plc or give up 3.09% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Creo Medical Group vs. Optima Health plc
Performance |
| Timeline |
| Creo Medical Group |
| Optima Health plc |
Creo Medical and Optima Health Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Creo Medical and Optima Health
The main advantage of trading using opposite Creo Medical and Optima Health positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Creo Medical 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.| Creo Medical vs. Samsung Electronics Co | Creo Medical vs. Samsung Electronics Co | Creo Medical vs. Hyundai Motor | Creo Medical vs. Toyota Motor Corp |
| Optima Health vs. Toyota Motor Corp | Optima Health vs. OTP Bank Nyrt | Optima Health vs. Cognizant Technology Solutions | Optima Health vs. Lendinvest PLC |
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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.
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