Correlation Between Optima Health and Flow Traders
Can any of the company-specific risk be diversified away by investing in both Optima Health and Flow Traders 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 Flow Traders 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 Flow Traders NV, you can compare the effects of market volatilities on Optima Health and Flow Traders 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 Flow Traders. Check out your portfolio center. Please also check ongoing floating volatility patterns of Optima Health and Flow Traders.
Diversification Opportunities for Optima Health and Flow Traders
0.37 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Optima and Flow is 0.37. Overlapping area represents the amount of risk that can be diversified away by holding Optima Health plc and Flow Traders NV in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Flow Traders NV 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 Flow Traders. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Flow Traders NV has no effect on the direction of Optima Health i.e., Optima Health and Flow Traders go up and down completely randomly.
Pair Corralation between Optima Health and Flow Traders
Assuming the 90 days trading horizon Optima Health is expected to generate 4.55 times less return on investment than Flow Traders. In addition to that, Optima Health is 1.02 times more volatile than Flow Traders NV. It trades about 0.05 of its total potential returns per unit of risk. Flow Traders NV is currently generating about 0.25 per unit of volatility. If you would invest 1,724 in Flow Traders NV on September 2, 2024 and sell it today you would earn a total of 388.00 from holding Flow Traders NV or generate 22.51% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 72.73% |
| Values | Daily Returns |
Optima Health plc vs. Flow Traders NV
Performance |
| Timeline |
| Optima Health plc |
| Flow Traders NV |
Optima Health and Flow Traders Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Optima Health and Flow Traders
The main advantage of trading using opposite Optima Health and Flow Traders positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Optima Health position performs unexpectedly, Flow Traders 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 Flow Traders will offset losses from the drop in Flow Traders' 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 |
| Flow Traders vs. Uniper SE | Flow Traders vs. Mulberry Group PLC | Flow Traders vs. London Security Plc | Flow Traders vs. Triad Group PLC |
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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.
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