Correlation Between Optima Health and Sabien Technology
Can any of the company-specific risk be diversified away by investing in both Optima Health and Sabien Technology 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 Sabien Technology 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 Sabien Technology Group, you can compare the effects of market volatilities on Optima Health and Sabien Technology 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 Sabien Technology. Check out your portfolio center. Please also check ongoing floating volatility patterns of Optima Health and Sabien Technology.
Diversification Opportunities for Optima Health and Sabien Technology
-0.13 | Correlation Coefficient |
Good diversification
The 3 months correlation between Optima and Sabien is -0.13. Overlapping area represents the amount of risk that can be diversified away by holding Optima Health plc and Sabien Technology Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sabien Technology 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 Sabien Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sabien Technology has no effect on the direction of Optima Health i.e., Optima Health and Sabien Technology go up and down completely randomly.
Pair Corralation between Optima Health and Sabien Technology
Assuming the 90 days trading horizon Optima Health plc is expected to generate 0.28 times more return on investment than Sabien Technology. However, Optima Health plc is 3.59 times less risky than Sabien Technology. It trades about -0.06 of its potential returns per unit of risk. Sabien Technology Group is currently generating about -0.04 per unit of risk. If you would invest 16,000 in Optima Health plc on September 13, 2024 and sell it today you would lose (400.00) from holding Optima Health plc or give up 2.5% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Optima Health plc vs. Sabien Technology Group
Performance |
| Timeline |
| Optima Health plc |
| Sabien Technology |
Optima Health and Sabien Technology Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Optima Health and Sabien Technology
The main advantage of trading using opposite Optima Health and Sabien Technology positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Optima Health position performs unexpectedly, Sabien Technology 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 Sabien Technology will offset losses from the drop in Sabien Technology's long position.| Optima Health vs. Toyota Motor Corp | Optima Health vs. SoftBank Group Corp | Optima Health vs. OTP Bank Nyrt | Optima Health vs. Hershey Co |
| Sabien Technology vs. International Biotechnology Trust | Sabien Technology vs. Abingdon Health Plc | Sabien Technology vs. Optima Health plc | Sabien Technology vs. Inspiration Healthcare Group |
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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.
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