Correlation Between Optima Health and Learning Technologies
Can any of the company-specific risk be diversified away by investing in both Optima Health and Learning Technologies 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 Learning Technologies 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 Learning Technologies Group, you can compare the effects of market volatilities on Optima Health and Learning Technologies 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 Learning Technologies. Check out your portfolio center. Please also check ongoing floating volatility patterns of Optima Health and Learning Technologies.
Diversification Opportunities for Optima Health and Learning Technologies
-0.7 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Optima and Learning is -0.7. Overlapping area represents the amount of risk that can be diversified away by holding Optima Health plc and Learning Technologies Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Learning Technologies 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 Learning Technologies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Learning Technologies has no effect on the direction of Optima Health i.e., Optima Health and Learning Technologies go up and down completely randomly.
Pair Corralation between Optima Health and Learning Technologies
Assuming the 90 days trading horizon Optima Health plc is expected to under-perform the Learning Technologies. In addition to that, Optima Health is 4.55 times more volatile than Learning Technologies Group. It trades about -0.54 of its total potential returns per unit of risk. Learning Technologies Group is currently generating about -0.2 per unit of volatility. If you would invest 9,840 in Learning Technologies Group on October 11, 2024 and sell it today you would lose (80.00) from holding Learning Technologies Group or give up 0.81% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 95.0% |
| Values | Daily Returns |
Optima Health plc vs. Learning Technologies Group
Performance |
| Timeline |
| Optima Health plc |
| Learning Technologies |
Optima Health and Learning Technologies Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Optima Health and Learning Technologies
The main advantage of trading using opposite Optima Health and Learning Technologies positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Optima Health position performs unexpectedly, Learning Technologies 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 Learning Technologies will offset losses from the drop in Learning Technologies' long position.| Optima Health vs. Toyota Motor Corp | Optima Health vs. OTP Bank Nyrt | Optima Health vs. Newmont Corp | Optima Health vs. ONEOK Inc |
| Learning Technologies vs. Spire Healthcare Group | Learning Technologies vs. Universal Health Services | Learning Technologies vs. Worldwide Healthcare Trust | Learning Technologies vs. Optima Health plc |
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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
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