Correlation Between Optima Health and State Bank
Can any of the company-specific risk be diversified away by investing in both Optima Health and State Bank 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 State Bank 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 State Bank of, you can compare the effects of market volatilities on Optima Health and State Bank 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 State Bank. Check out your portfolio center. Please also check ongoing floating volatility patterns of Optima Health and State Bank.
Diversification Opportunities for Optima Health and State Bank
-0.36 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Optima and State is -0.36. Overlapping area represents the amount of risk that can be diversified away by holding Optima Health plc and State Bank of in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on State Bank 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 State Bank. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of State Bank has no effect on the direction of Optima Health i.e., Optima Health and State Bank go up and down completely randomly.
Pair Corralation between Optima Health and State Bank
Assuming the 90 days trading horizon Optima Health plc is expected to generate 1.96 times more return on investment than State Bank. However, Optima Health is 1.96 times more volatile than State Bank of. It trades about 0.43 of its potential returns per unit of risk. State Bank of is currently generating about -0.22 per unit of risk. If you would invest 14,900 in Optima Health plc on November 28, 2024 and sell it today you would earn a total of 3,400 from holding Optima Health plc or generate 22.82% 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. State Bank of
Performance |
| Timeline |
| Optima Health plc |
| State Bank |
Optima Health and State Bank Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Optima Health and State Bank
The main advantage of trading using opposite Optima Health and State Bank positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Optima Health position performs unexpectedly, State Bank 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 State Bank will offset losses from the drop in State Bank's long position.| Optima Health vs. Systemair AB | Optima Health vs. Infrastrutture Wireless Italiane | Optima Health vs. Alaska Air Group | Optima Health vs. Delta Air Lines |
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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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.
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