Correlation Between Optima Health and LBG Media
Can any of the company-specific risk be diversified away by investing in both Optima Health and LBG Media 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 LBG Media 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 LBG Media PLC, you can compare the effects of market volatilities on Optima Health and LBG Media 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 LBG Media. Check out your portfolio center. Please also check ongoing floating volatility patterns of Optima Health and LBG Media.
Diversification Opportunities for Optima Health and LBG Media
0.15 | Correlation Coefficient |
Average diversification
The 3 months correlation between Optima and LBG is 0.15. Overlapping area represents the amount of risk that can be diversified away by holding Optima Health plc and LBG Media PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on LBG Media 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 LBG Media. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of LBG Media PLC has no effect on the direction of Optima Health i.e., Optima Health and LBG Media go up and down completely randomly.
Pair Corralation between Optima Health and LBG Media
Assuming the 90 days trading horizon Optima Health plc is expected to generate 0.53 times more return on investment than LBG Media. However, Optima Health plc is 1.89 times less risky than LBG Media. It trades about -0.14 of its potential returns per unit of risk. LBG Media PLC is currently generating about -0.12 per unit of risk. If you would invest 14,700 in Optima Health plc on October 21, 2024 and sell it today you would lose (350.00) from holding Optima Health plc or give up 2.38% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Optima Health plc vs. LBG Media PLC
Performance |
| Timeline |
| Optima Health plc |
| LBG Media PLC |
Optima Health and LBG Media Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Optima Health and LBG Media
The main advantage of trading using opposite Optima Health and LBG Media positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Optima Health position performs unexpectedly, LBG Media 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 LBG Media will offset losses from the drop in LBG Media's long position.| Optima Health vs. Monks Investment Trust | Optima Health vs. Schroders Investment Trusts | Optima Health vs. Canadian General Investments | Optima Health vs. Advanced Medical Solutions |
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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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.
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