Correlation Between Optima Health and Intermediate Capital
Can any of the company-specific risk be diversified away by investing in both Optima Health and Intermediate Capital 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 Intermediate Capital 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 Intermediate Capital Group, you can compare the effects of market volatilities on Optima Health and Intermediate Capital 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 Intermediate Capital. Check out your portfolio center. Please also check ongoing floating volatility patterns of Optima Health and Intermediate Capital.
Diversification Opportunities for Optima Health and Intermediate Capital
-0.25 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Optima and Intermediate is -0.25. Overlapping area represents the amount of risk that can be diversified away by holding Optima Health plc and Intermediate Capital Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Intermediate Capital 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 Intermediate Capital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Intermediate Capital has no effect on the direction of Optima Health i.e., Optima Health and Intermediate Capital go up and down completely randomly.
Pair Corralation between Optima Health and Intermediate Capital
Assuming the 90 days trading horizon Optima Health plc is expected to under-perform the Intermediate Capital. But the stock apears to be less risky and, when comparing its historical volatility, Optima Health plc is 3.05 times less risky than Intermediate Capital. The stock trades about -0.34 of its potential returns per unit of risk. The Intermediate Capital Group is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest 210,000 in Intermediate Capital Group on September 4, 2024 and sell it today you would earn a total of 2,200 from holding Intermediate Capital Group or generate 1.05% 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. Intermediate Capital Group
Performance |
| Timeline |
| Optima Health plc |
| Intermediate Capital |
Optima Health and Intermediate Capital Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Optima Health and Intermediate Capital
The main advantage of trading using opposite Optima Health and Intermediate Capital positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Optima Health position performs unexpectedly, Intermediate Capital 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 Intermediate Capital will offset losses from the drop in Intermediate Capital's long position.| Optima Health vs. Toyota Motor Corp | Optima Health vs. SoftBank Group Corp | Optima Health vs. OTP Bank Nyrt | Optima Health vs. Las Vegas Sands |
| Intermediate Capital vs. SupplyMe Capital PLC | Intermediate Capital vs. Lloyds Banking Group | Intermediate Capital vs. Premier African Minerals | Intermediate Capital vs. SANTANDER UK 8 |
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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.
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