Correlation Between Optima Health and Futura Medical
Can any of the company-specific risk be diversified away by investing in both Optima Health and Futura Medical 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 Futura Medical 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 Futura Medical, you can compare the effects of market volatilities on Optima Health and Futura Medical 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 Futura Medical. Check out your portfolio center. Please also check ongoing floating volatility patterns of Optima Health and Futura Medical.
Diversification Opportunities for Optima Health and Futura Medical
0.83 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Optima and Futura is 0.83. Overlapping area represents the amount of risk that can be diversified away by holding Optima Health plc and Futura Medical in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Futura Medical 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 Futura Medical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Futura Medical has no effect on the direction of Optima Health i.e., Optima Health and Futura Medical go up and down completely randomly.
Pair Corralation between Optima Health and Futura Medical
Assuming the 90 days trading horizon Optima Health plc is expected to generate 0.5 times more return on investment than Futura Medical. However, Optima Health plc is 2.0 times less risky than Futura Medical. It trades about 0.29 of its potential returns per unit of risk. Futura Medical is currently generating about -0.11 per unit of risk. If you would invest 14,200 in Optima Health plc on October 30, 2024 and sell it today you would earn a total of 700.00 from holding Optima Health plc or generate 4.93% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Optima Health plc vs. Futura Medical
Performance |
| Timeline |
| Optima Health plc |
| Futura Medical |
Optima Health and Futura Medical Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Optima Health and Futura Medical
The main advantage of trading using opposite Optima Health and Futura Medical positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Optima Health position performs unexpectedly, Futura Medical 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 Futura Medical will offset losses from the drop in Futura Medical's long position.| Optima Health vs. TBC Bank Group | Optima Health vs. Erste Group Bank | Optima Health vs. Ameriprise Financial | Optima Health vs. Sydbank |
| Futura Medical vs. Spotify Technology SA | Futura Medical vs. Roper Technologies | Futura Medical vs. Allianz Technology Trust | Futura Medical vs. Fidelity National Information |
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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.
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