Correlation Between Ocean Power and Signify NV
Can any of the company-specific risk be diversified away by investing in both Ocean Power and Signify NV 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 Ocean Power and Signify NV into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ocean Power Technologies and Signify NV, you can compare the effects of market volatilities on Ocean Power and Signify NV 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 Ocean Power with a short position of Signify NV. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ocean Power and Signify NV.
Diversification Opportunities for Ocean Power and Signify NV
-0.42 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Ocean and Signify is -0.42. Overlapping area represents the amount of risk that can be diversified away by holding Ocean Power Technologies and Signify NV in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Signify NV and Ocean Power 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 Ocean Power Technologies are associated (or correlated) with Signify NV. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Signify NV has no effect on the direction of Ocean Power i.e., Ocean Power and Signify NV go up and down completely randomly.
Pair Corralation between Ocean Power and Signify NV
Given the investment horizon of 90 days Ocean Power Technologies is expected to generate 6.37 times more return on investment than Signify NV. However, Ocean Power is 6.37 times more volatile than Signify NV. It trades about 0.08 of its potential returns per unit of risk. Signify NV is currently generating about -0.06 per unit of risk. If you would invest 33.00 in Ocean Power Technologies on November 5, 2024 and sell it today you would earn a total of 33.00 from holding Ocean Power Technologies or generate 100.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 88.62% |
| Values | Daily Returns |
Ocean Power Technologies vs. Signify NV
Performance |
| Timeline |
| Ocean Power Technologies |
| Signify NV |
Ocean Power and Signify NV Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ocean Power and Signify NV
The main advantage of trading using opposite Ocean Power and Signify NV positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ocean Power position performs unexpectedly, Signify NV 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 Signify NV will offset losses from the drop in Signify NV's long position.| Ocean Power vs. Pioneer Power Solutions | Ocean Power vs. CBAK Energy Technology | Ocean Power vs. Ideal Power | Ocean Power vs. Expion360 |
| Signify NV vs. Legrand SA ADR | Signify NV vs. Energizer Holdings | Signify NV vs. Polar Power | Signify NV vs. Ocean Power Technologies |
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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