Correlation Between Optima Health and Spire Healthcare
Can any of the company-specific risk be diversified away by investing in both Optima Health and Spire Healthcare 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 Spire Healthcare 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 Spire Healthcare Group, you can compare the effects of market volatilities on Optima Health and Spire Healthcare 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 Spire Healthcare. Check out your portfolio center. Please also check ongoing floating volatility patterns of Optima Health and Spire Healthcare.
Diversification Opportunities for Optima Health and Spire Healthcare
-0.48 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Optima and Spire is -0.48. Overlapping area represents the amount of risk that can be diversified away by holding Optima Health plc and Spire Healthcare Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Spire Healthcare 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 Spire Healthcare. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Spire Healthcare has no effect on the direction of Optima Health i.e., Optima Health and Spire Healthcare go up and down completely randomly.
Pair Corralation between Optima Health and Spire Healthcare
Assuming the 90 days trading horizon Optima Health plc is expected to generate 1.0 times more return on investment than Spire Healthcare. However, Optima Health is 1.0 times more volatile than Spire Healthcare Group. It trades about 0.05 of its potential returns per unit of risk. Spire Healthcare Group is currently generating about -0.13 per unit of risk. If you would invest 15,100 in Optima Health plc on September 2, 2024 and sell it today you would earn a total of 450.00 from holding Optima Health plc or generate 2.98% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 72.73% |
| Values | Daily Returns |
Optima Health plc vs. Spire Healthcare Group
Performance |
| Timeline |
| Optima Health plc |
| Spire Healthcare |
Optima Health and Spire Healthcare Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Optima Health and Spire Healthcare
The main advantage of trading using opposite Optima Health and Spire Healthcare positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Optima Health position performs unexpectedly, Spire Healthcare 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 Spire Healthcare will offset losses from the drop in Spire Healthcare's long position.| Optima Health vs. Toyota Motor Corp | Optima Health vs. OTP Bank Nyrt | Optima Health vs. Las Vegas Sands | Optima Health vs. Yum Brands |
| Spire Healthcare vs. Samsung Electronics Co | Spire Healthcare vs. Samsung Electronics Co | Spire Healthcare vs. Hyundai Motor | Spire Healthcare vs. Toyota Motor Corp |
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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.
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