Correlation Between Optima Health and Abrdn Property
Can any of the company-specific risk be diversified away by investing in both Optima Health and Abrdn Property 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 Abrdn Property 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 abrdn Property Income, you can compare the effects of market volatilities on Optima Health and Abrdn Property 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 Abrdn Property. Check out your portfolio center. Please also check ongoing floating volatility patterns of Optima Health and Abrdn Property.
Diversification Opportunities for Optima Health and Abrdn Property
0.11 | Correlation Coefficient |
Average diversification
The 3 months correlation between Optima and Abrdn is 0.11. Overlapping area represents the amount of risk that can be diversified away by holding Optima Health plc and abrdn Property Income in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on abrdn Property Income 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 Abrdn Property. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of abrdn Property Income has no effect on the direction of Optima Health i.e., Optima Health and Abrdn Property go up and down completely randomly.
Pair Corralation between Optima Health and Abrdn Property
Assuming the 90 days trading horizon Optima Health is expected to generate 43.91 times less return on investment than Abrdn Property. But when comparing it to its historical volatility, Optima Health plc is 40.75 times less risky than Abrdn Property. It trades about 0.04 of its potential returns per unit of risk. abrdn Property Income is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 4,504 in abrdn Property Income on September 12, 2024 and sell it today you would earn a total of 1,556 from holding abrdn Property Income or generate 34.55% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 14.29% |
| Values | Daily Returns |
Optima Health plc vs. abrdn Property Income
Performance |
| Timeline |
| Optima Health plc |
| abrdn Property Income |
Optima Health and Abrdn Property Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Optima Health and Abrdn Property
The main advantage of trading using opposite Optima Health and Abrdn Property positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Optima Health position performs unexpectedly, Abrdn Property 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 Abrdn Property will offset losses from the drop in Abrdn Property'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 |
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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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.
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