Correlation Between Optima Health and Sydbank
Can any of the company-specific risk be diversified away by investing in both Optima Health and Sydbank 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 Sydbank 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 Sydbank, you can compare the effects of market volatilities on Optima Health and Sydbank 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 Sydbank. Check out your portfolio center. Please also check ongoing floating volatility patterns of Optima Health and Sydbank.
Diversification Opportunities for Optima Health and Sydbank
0.32 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Optima and Sydbank is 0.32. Overlapping area represents the amount of risk that can be diversified away by holding Optima Health plc and Sydbank in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sydbank 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 Sydbank. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sydbank has no effect on the direction of Optima Health i.e., Optima Health and Sydbank go up and down completely randomly.
Pair Corralation between Optima Health and Sydbank
Assuming the 90 days trading horizon Optima Health is expected to generate 1.18 times less return on investment than Sydbank. But when comparing it to its historical volatility, Optima Health plc is 1.15 times less risky than Sydbank. It trades about 0.04 of its potential returns per unit of risk. Sydbank is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 30,125 in Sydbank on September 12, 2024 and sell it today you would earn a total of 7,105 from holding Sydbank or generate 23.59% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 14.32% |
| Values | Daily Returns |
Optima Health plc vs. Sydbank
Performance |
| Timeline |
| Optima Health plc |
| Sydbank |
Optima Health and Sydbank Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Optima Health and Sydbank
The main advantage of trading using opposite Optima Health and Sydbank positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Optima Health position performs unexpectedly, Sydbank 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 Sydbank will offset losses from the drop in Sydbank's long position.| Optima Health vs. Toyota Motor Corp | Optima Health vs. SoftBank Group Corp | Optima Health vs. OTP Bank Nyrt | Optima Health vs. Hershey Co |
| Sydbank vs. Hansa Investment | Sydbank vs. Beeks Trading | Sydbank vs. Taylor Maritime Investments | Sydbank vs. Telecom Italia SpA |
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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.
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