Correlation Between Optomed PLC and Musti Group

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Can any of the company-specific risk be diversified away by investing in both Optomed PLC and Musti Group 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 Optomed PLC and Musti Group into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Optomed PLC and Musti Group Oyj, you can compare the effects of market volatilities on Optomed PLC and Musti Group 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 Optomed PLC with a short position of Musti Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of Optomed PLC and Musti Group.

Diversification Opportunities for Optomed PLC and Musti Group

-0.63
  Correlation Coefficient

Excellent diversification

The 3 months correlation between Optomed and Musti is -0.63. Overlapping area represents the amount of risk that can be diversified away by holding Optomed PLC and Musti Group Oyj in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Musti Group Oyj and Optomed PLC 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 Optomed PLC are associated (or correlated) with Musti Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Musti Group Oyj has no effect on the direction of Optomed PLC i.e., Optomed PLC and Musti Group go up and down completely randomly.

Pair Corralation between Optomed PLC and Musti Group

Assuming the 90 days trading horizon Optomed PLC is expected to generate 1.67 times more return on investment than Musti Group. However, Optomed PLC is 1.67 times more volatile than Musti Group Oyj. It trades about 0.06 of its potential returns per unit of risk. Musti Group Oyj is currently generating about 0.01 per unit of risk. If you would invest  420.00  in Optomed PLC on October 23, 2024 and sell it today you would earn a total of  9.00  from holding Optomed PLC or generate 2.14% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthWeak
Accuracy93.75%
ValuesDaily Returns

Optomed PLC  vs.  Musti Group Oyj

 Performance 
       Timeline  
Optomed PLC 

Risk-Adjusted Performance

3 of 100

 
Weak
 
Strong
Insignificant
Compared to the overall equity markets, risk-adjusted returns on investments in Optomed PLC are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of rather weak basic indicators, Optomed PLC may actually be approaching a critical reversion point that can send shares even higher in February 2025.
Musti Group Oyj 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days Musti Group Oyj has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's technical indicators remain fairly strong which may send shares a bit higher in February 2025. The recent confusion may also be a sign of long-lasting up-swing for the firm traders.

Optomed PLC and Musti Group Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Optomed PLC and Musti Group

The main advantage of trading using opposite Optomed PLC and Musti Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Optomed PLC position performs unexpectedly, Musti Group 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 Musti Group will offset losses from the drop in Musti Group's long position.
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The idea behind Optomed PLC and Musti Group Oyj pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.
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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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.

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