Correlation Between Induction Healthcare and Optima Health
Can any of the company-specific risk be diversified away by investing in both Induction Healthcare 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 Induction Healthcare and Optima Health into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Induction Healthcare Group and Optima Health plc, you can compare the effects of market volatilities on Induction Healthcare 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 Induction Healthcare with a short position of Optima Health. Check out your portfolio center. Please also check ongoing floating volatility patterns of Induction Healthcare and Optima Health.
Diversification Opportunities for Induction Healthcare and Optima Health
0.46 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Induction and Optima is 0.46. Overlapping area represents the amount of risk that can be diversified away by holding Induction Healthcare 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 Induction Healthcare 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 Induction Healthcare 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 Induction Healthcare i.e., Induction Healthcare and Optima Health go up and down completely randomly.
Pair Corralation between Induction Healthcare and Optima Health
Assuming the 90 days trading horizon Induction Healthcare Group is expected to under-perform the Optima Health. In addition to that, Induction Healthcare is 2.95 times more volatile than Optima Health plc. It trades about -0.08 of its total potential returns per unit of risk. Optima Health plc is currently generating about 0.02 per unit of volatility. If you would invest 15,100 in Optima Health plc on September 4, 2024 and sell it today you would earn a total of 150.00 from holding Optima Health plc or generate 0.99% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 19.76% |
| Values | Daily Returns |
Induction Healthcare Group vs. Optima Health plc
Performance |
| Timeline |
| Induction Healthcare |
| Optima Health plc |
Induction Healthcare and Optima Health Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Induction Healthcare and Optima Health
The main advantage of trading using opposite Induction Healthcare and Optima Health positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Induction Healthcare 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.| Induction Healthcare vs. Samsung Electronics Co | Induction Healthcare vs. Samsung Electronics Co | Induction Healthcare vs. Hyundai Motor | Induction Healthcare 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. Las Vegas Sands |
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 Top Crypto Exchanges module to search and analyze digital assets across top global cryptocurrency exchanges.
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