Correlation Between Eco Animal and Optima Health
Can any of the company-specific risk be diversified away by investing in both Eco Animal 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 Eco Animal and Optima Health into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Eco Animal Health and Optima Health plc, you can compare the effects of market volatilities on Eco Animal 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 Eco Animal with a short position of Optima Health. Check out your portfolio center. Please also check ongoing floating volatility patterns of Eco Animal and Optima Health.
Diversification Opportunities for Eco Animal and Optima Health
-0.05 | Correlation Coefficient |
Good diversification
The 3 months correlation between Eco and Optima is -0.05. Overlapping area represents the amount of risk that can be diversified away by holding Eco Animal Health 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 Eco Animal 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 Eco Animal Health 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 Eco Animal i.e., Eco Animal and Optima Health go up and down completely randomly.
Pair Corralation between Eco Animal and Optima Health
Assuming the 90 days trading horizon Eco Animal Health is expected to under-perform the Optima Health. In addition to that, Eco Animal is 1.85 times more volatile than Optima Health plc. It trades about -0.03 of its total potential returns per unit of risk. Optima Health plc is currently generating about 0.08 per unit of volatility. If you would invest 15,100 in Optima Health plc on August 26, 2024 and sell it today you would earn a total of 700.00 from holding Optima Health plc or generate 4.64% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 8.63% |
| Values | Daily Returns |
Eco Animal Health vs. Optima Health plc
Performance |
| Timeline |
| Eco Animal Health |
| Optima Health plc |
Eco Animal and Optima Health Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Eco Animal and Optima Health
The main advantage of trading using opposite Eco Animal and Optima Health positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Eco Animal 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.| Eco Animal vs. Samsung Electronics Co | Eco Animal vs. Samsung Electronics Co | Eco Animal vs. Hyundai Motor | Eco Animal vs. Toyota Motor Corp |
| Optima Health vs. Toyota Motor Corp | Optima Health vs. SoftBank Group Corp | Optima Health vs. OTP Bank Nyrt | Optima Health vs. Yum Brands |
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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.
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