Correlation Between Optima Health and URU Metals
Can any of the company-specific risk be diversified away by investing in both Optima Health and URU Metals 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 URU Metals 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 URU Metals, you can compare the effects of market volatilities on Optima Health and URU Metals 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 URU Metals. Check out your portfolio center. Please also check ongoing floating volatility patterns of Optima Health and URU Metals.
Diversification Opportunities for Optima Health and URU Metals
-0.37 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Optima and URU is -0.37. Overlapping area represents the amount of risk that can be diversified away by holding Optima Health plc and URU Metals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on URU Metals 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 URU Metals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of URU Metals has no effect on the direction of Optima Health i.e., Optima Health and URU Metals go up and down completely randomly.
Pair Corralation between Optima Health and URU Metals
Assuming the 90 days trading horizon Optima Health plc is expected to under-perform the URU Metals. But the stock apears to be less risky and, when comparing its historical volatility, Optima Health plc is 2.45 times less risky than URU Metals. The stock trades about -0.64 of its potential returns per unit of risk. The URU Metals is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest 16,000 in URU Metals on October 12, 2024 and sell it today you would earn a total of 0.00 from holding URU Metals or generate 0.0% 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. URU Metals
Performance |
| Timeline |
| Optima Health plc |
| URU Metals |
Optima Health and URU Metals Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Optima Health and URU Metals
The main advantage of trading using opposite Optima Health and URU Metals positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Optima Health position performs unexpectedly, URU Metals 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 URU Metals will offset losses from the drop in URU Metals' long position.| Optima Health vs. Toyota Motor Corp | Optima Health vs. OTP Bank Nyrt | Optima Health vs. Newmont Corp | Optima Health vs. ONEOK Inc |
| URU Metals vs. Monster Beverage Corp | URU Metals vs. Ion Beam Applications | URU Metals vs. Gamma Communications PLC | URU Metals vs. GlobalData 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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.
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