Correlation Between Global Health and Otto Energy
Can any of the company-specific risk be diversified away by investing in both Global Health and Otto Energy 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 Global Health and Otto Energy into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Global Health and Otto Energy, you can compare the effects of market volatilities on Global Health and Otto Energy 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 Global Health with a short position of Otto Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Global Health and Otto Energy.
Diversification Opportunities for Global Health and Otto Energy
0.27 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Global and Otto is 0.27. Overlapping area represents the amount of risk that can be diversified away by holding Global Health and Otto Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Otto Energy and Global Health 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 Global Health are associated (or correlated) with Otto Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Otto Energy has no effect on the direction of Global Health i.e., Global Health and Otto Energy go up and down completely randomly.
Pair Corralation between Global Health and Otto Energy
Assuming the 90 days trading horizon Global Health is expected to generate 0.49 times more return on investment than Otto Energy. However, Global Health is 2.05 times less risky than Otto Energy. It trades about 0.02 of its potential returns per unit of risk. Otto Energy is currently generating about -0.02 per unit of risk. If you would invest 14.00 in Global Health on September 12, 2024 and sell it today you would earn a total of 0.00 from holding Global Health or generate 0.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Global Health vs. Otto Energy
Performance |
| Timeline |
| Global Health |
| Otto Energy |
Global Health and Otto Energy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Global Health and Otto Energy
The main advantage of trading using opposite Global Health and Otto Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Global Health position performs unexpectedly, Otto Energy 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 Otto Energy will offset losses from the drop in Otto Energy's long position.| Global Health vs. CSL | Global Health vs. Tamawood | Global Health vs. Cochlear | Global Health vs. Rea Group |
| Otto Energy vs. Computershare | Otto Energy vs. EVE Health Group | Otto Energy vs. Global Health | Otto Energy vs. Regis Healthcare |
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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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