Correlation Between Optima Health and Gerresheimer
Can any of the company-specific risk be diversified away by investing in both Optima Health and Gerresheimer 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 Gerresheimer 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 Gerresheimer AG, you can compare the effects of market volatilities on Optima Health and Gerresheimer 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 Gerresheimer. Check out your portfolio center. Please also check ongoing floating volatility patterns of Optima Health and Gerresheimer.
Diversification Opportunities for Optima Health and Gerresheimer
-0.24 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Optima and Gerresheimer is -0.24. Overlapping area represents the amount of risk that can be diversified away by holding Optima Health plc and Gerresheimer AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gerresheimer AG 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 Gerresheimer. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Gerresheimer AG has no effect on the direction of Optima Health i.e., Optima Health and Gerresheimer go up and down completely randomly.
Pair Corralation between Optima Health and Gerresheimer
Assuming the 90 days trading horizon Optima Health plc is expected to generate 0.39 times more return on investment than Gerresheimer. However, Optima Health plc is 2.59 times less risky than Gerresheimer. It trades about -0.29 of its potential returns per unit of risk. Gerresheimer AG is currently generating about -0.14 per unit of risk. If you would invest 16,200 in Optima Health plc on September 2, 2024 and sell it today you would lose (650.00) from holding Optima Health plc or give up 4.01% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Optima Health plc vs. Gerresheimer AG
Performance |
| Timeline |
| Optima Health plc |
| Gerresheimer AG |
Optima Health and Gerresheimer Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Optima Health and Gerresheimer
The main advantage of trading using opposite Optima Health and Gerresheimer positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Optima Health position performs unexpectedly, Gerresheimer 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 Gerresheimer will offset losses from the drop in Gerresheimer's long position.| Optima Health vs. Toyota Motor Corp | Optima Health vs. OTP Bank Nyrt | Optima Health vs. Las Vegas Sands | Optima Health vs. Yum Brands |
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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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