Correlation Between Optronics Technologies and Pipe Works
Can any of the company-specific risk be diversified away by investing in both Optronics Technologies and Pipe Works 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 Optronics Technologies and Pipe Works into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Optronics Technologies SA and Pipe Works L, you can compare the effects of market volatilities on Optronics Technologies and Pipe Works 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 Optronics Technologies with a short position of Pipe Works. Check out your portfolio center. Please also check ongoing floating volatility patterns of Optronics Technologies and Pipe Works.
Diversification Opportunities for Optronics Technologies and Pipe Works
-0.15 | Correlation Coefficient |
Good diversification
The 3 months correlation between Optronics and Pipe is -0.15. Overlapping area represents the amount of risk that can be diversified away by holding Optronics Technologies SA and Pipe Works L in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pipe Works L and Optronics Technologies 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 Optronics Technologies SA are associated (or correlated) with Pipe Works. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pipe Works L has no effect on the direction of Optronics Technologies i.e., Optronics Technologies and Pipe Works go up and down completely randomly.
Pair Corralation between Optronics Technologies and Pipe Works
Assuming the 90 days trading horizon Optronics Technologies SA is expected to generate 1.22 times more return on investment than Pipe Works. However, Optronics Technologies is 1.22 times more volatile than Pipe Works L. It trades about -0.01 of its potential returns per unit of risk. Pipe Works L is currently generating about -0.02 per unit of risk. If you would invest 199.00 in Optronics Technologies SA on September 3, 2024 and sell it today you would lose (51.00) from holding Optronics Technologies SA or give up 25.63% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Optronics Technologies SA vs. Pipe Works L
Performance |
| Timeline |
| Optronics Technologies |
| Pipe Works L |
Optronics Technologies and Pipe Works Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Optronics Technologies and Pipe Works
The main advantage of trading using opposite Optronics Technologies and Pipe Works positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Optronics Technologies position performs unexpectedly, Pipe Works 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 Pipe Works will offset losses from the drop in Pipe Works' long position.| Optronics Technologies vs. Technical Olympic SA | Optronics Technologies vs. Intertech SA Inter | Optronics Technologies vs. Foodlink AE | Optronics Technologies vs. General Commercial Industrial |
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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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.
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