Correlation Between Optima Health and Gfinity PLC
Can any of the company-specific risk be diversified away by investing in both Optima Health and Gfinity PLC 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 Gfinity PLC 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 Gfinity PLC, you can compare the effects of market volatilities on Optima Health and Gfinity PLC 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 Gfinity PLC. Check out your portfolio center. Please also check ongoing floating volatility patterns of Optima Health and Gfinity PLC.
Diversification Opportunities for Optima Health and Gfinity PLC
-0.64 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Optima and Gfinity is -0.64. Overlapping area represents the amount of risk that can be diversified away by holding Optima Health plc and Gfinity PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gfinity PLC 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 Gfinity PLC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Gfinity PLC has no effect on the direction of Optima Health i.e., Optima Health and Gfinity PLC go up and down completely randomly.
Pair Corralation between Optima Health and Gfinity PLC
Assuming the 90 days trading horizon Optima Health plc is expected to under-perform the Gfinity PLC. But the stock apears to be less risky and, when comparing its historical volatility, Optima Health plc is 22.57 times less risky than Gfinity PLC. The stock trades about -0.57 of its potential returns per unit of risk. The Gfinity PLC is currently generating about 0.29 of returns per unit of risk over similar time horizon. If you would invest 4.25 in Gfinity PLC on October 13, 2024 and sell it today you would earn a total of 3.25 from holding Gfinity PLC or generate 76.47% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 73.68% |
| Values | Daily Returns |
Optima Health plc vs. Gfinity PLC
Performance |
| Timeline |
| Optima Health plc |
| Gfinity PLC |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Solid
Optima Health and Gfinity PLC Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Optima Health and Gfinity PLC
The main advantage of trading using opposite Optima Health and Gfinity PLC positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Optima Health position performs unexpectedly, Gfinity PLC 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 Gfinity PLC will offset losses from the drop in Gfinity PLC's long position.| Optima Health vs. Alliance Data Systems | Optima Health vs. Rosslyn Data Technologies | Optima Health vs. JD Sports Fashion | Optima Health vs. Westlake Chemical Corp |
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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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..
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