Correlation Between Optima Health and Naturhouse Health
Can any of the company-specific risk be diversified away by investing in both Optima Health and Naturhouse 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 Optima Health and Naturhouse Health 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 Naturhouse Health SA, you can compare the effects of market volatilities on Optima Health and Naturhouse 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 Optima Health with a short position of Naturhouse Health. Check out your portfolio center. Please also check ongoing floating volatility patterns of Optima Health and Naturhouse Health.
Diversification Opportunities for Optima Health and Naturhouse Health
-0.13 | Correlation Coefficient |
Good diversification
The 3 months correlation between Optima and Naturhouse is -0.13. Overlapping area represents the amount of risk that can be diversified away by holding Optima Health plc and Naturhouse Health SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Naturhouse Health 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 Naturhouse Health. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Naturhouse Health has no effect on the direction of Optima Health i.e., Optima Health and Naturhouse Health go up and down completely randomly.
Pair Corralation between Optima Health and Naturhouse Health
Assuming the 90 days trading horizon Optima Health plc is expected to under-perform the Naturhouse Health. But the stock apears to be less risky and, when comparing its historical volatility, Optima Health plc is 1.7 times less risky than Naturhouse Health. The stock trades about -0.29 of its potential returns per unit of risk. The Naturhouse Health SA is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest 164.00 in Naturhouse Health SA on September 1, 2024 and sell it today you would earn a total of 4.00 from holding Naturhouse Health SA or generate 2.44% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Optima Health plc vs. Naturhouse Health SA
Performance |
| Timeline |
| Optima Health plc |
| Naturhouse Health |
Optima Health and Naturhouse Health Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Optima Health and Naturhouse Health
The main advantage of trading using opposite Optima Health and Naturhouse Health positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Optima Health position performs unexpectedly, Naturhouse 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 Naturhouse Health will offset losses from the drop in Naturhouse Health'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 |
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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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.
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