Correlation Between Optima Health and Industrivarden
Can any of the company-specific risk be diversified away by investing in both Optima Health and Industrivarden 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 Optima Health and Industrivarden into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Optima Health plc and Industrivarden AB ser, you can compare the effects of market volatilities on Optima Health and Industrivarden 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 Optima Health with a short position of Industrivarden. Check out your portfolio center. Please also check ongoing floating volatility patterns of Optima Health and Industrivarden.
Diversification Opportunities for Optima Health and Industrivarden
-0.2 | Correlation Coefficient |
Good diversification
The 3 months correlation between Optima and Industrivarden is -0.2. Overlapping area represents the amount of risk that can be diversified away by holding Optima Health plc and Industrivarden AB ser in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Industrivarden AB ser and Optima 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 Optima Health plc are associated (or correlated) with Industrivarden. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Industrivarden AB ser has no effect on the direction of Optima Health i.e., Optima Health and Industrivarden go up and down completely randomly.
Pair Corralation between Optima Health and Industrivarden
Assuming the 90 days trading horizon Optima Health plc is expected to under-perform the Industrivarden. But the stock apears to be less risky and, when comparing its historical volatility, Optima Health plc is 1.64 times less risky than Industrivarden. The stock trades about -0.29 of its potential returns per unit of risk. The Industrivarden AB ser is currently generating about -0.09 of returns per unit of risk over similar time horizon. 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 |
Optima Health plc vs. Industrivarden AB ser
Performance |
| Timeline |
| Optima Health plc |
| Industrivarden AB ser |
Optima Health and Industrivarden Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Optima Health and Industrivarden
The main advantage of trading using opposite Optima Health and Industrivarden positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Optima Health position performs unexpectedly, Industrivarden 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 Industrivarden will offset losses from the drop in Industrivarden's long position.| Optima Health vs. Trainline Plc | Optima Health vs. Allianz Technology Trust | Optima Health vs. Sabien Technology Group | Optima Health vs. Gaztransport et Technigaz |
| Industrivarden vs. Optima Health plc | Industrivarden vs. Ashtead Technology Holdings | Industrivarden vs. Spire Healthcare Group | Industrivarden vs. X FAB Silicon Foundries |
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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