Correlation Between Optima Health and Herald Investment
Can any of the company-specific risk be diversified away by investing in both Optima Health and Herald Investment 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 Herald Investment 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 Herald Investment Trust, you can compare the effects of market volatilities on Optima Health and Herald Investment 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 Herald Investment. Check out your portfolio center. Please also check ongoing floating volatility patterns of Optima Health and Herald Investment.
Diversification Opportunities for Optima Health and Herald Investment
-0.8 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Optima and Herald is -0.8. Overlapping area represents the amount of risk that can be diversified away by holding Optima Health plc and Herald Investment Trust in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Herald Investment Trust 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 Herald Investment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Herald Investment Trust has no effect on the direction of Optima Health i.e., Optima Health and Herald Investment go up and down completely randomly.
Pair Corralation between Optima Health and Herald Investment
Assuming the 90 days trading horizon Optima Health plc is expected to generate 0.6 times more return on investment than Herald Investment. However, Optima Health plc is 1.66 times less risky than Herald Investment. It trades about 0.23 of its potential returns per unit of risk. Herald Investment Trust is currently generating about -0.15 per unit of risk. If you would invest 14,300 in Optima Health plc on November 4, 2024 and sell it today you would earn a total of 600.00 from holding Optima Health plc or generate 4.2% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Optima Health plc vs. Herald Investment Trust
Performance |
| Timeline |
| Optima Health plc |
| Herald Investment Trust |
Optima Health and Herald Investment Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Optima Health and Herald Investment
The main advantage of trading using opposite Optima Health and Herald Investment positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Optima Health position performs unexpectedly, Herald Investment 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 Herald Investment will offset losses from the drop in Herald Investment's long position.| Optima Health vs. Wheaton Precious Metals | Optima Health vs. GreenX Metals | Optima Health vs. Endeavour Mining Corp | Optima Health vs. Cairo Communication SpA |
| Herald Investment vs. Quadrise Plc | Herald Investment vs. ImmuPharma PLC | Herald Investment vs. Intuitive Investments Group | Herald Investment vs. European Metals Holdings |
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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.
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