Correlation Between Otovo AS and Ocean Sun
Can any of the company-specific risk be diversified away by investing in both Otovo AS and Ocean Sun 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 Otovo AS and Ocean Sun into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Otovo AS and Ocean Sun As, you can compare the effects of market volatilities on Otovo AS and Ocean Sun 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 Otovo AS with a short position of Ocean Sun. Check out your portfolio center. Please also check ongoing floating volatility patterns of Otovo AS and Ocean Sun.
Diversification Opportunities for Otovo AS and Ocean Sun
Weak diversification
The 3 months correlation between Otovo and Ocean is 0.32. Overlapping area represents the amount of risk that can be diversified away by holding Otovo AS and Ocean Sun As in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ocean Sun As and Otovo AS 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 Otovo AS are associated (or correlated) with Ocean Sun. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ocean Sun As has no effect on the direction of Otovo AS i.e., Otovo AS and Ocean Sun go up and down completely randomly.
Pair Corralation between Otovo AS and Ocean Sun
Assuming the 90 days trading horizon Otovo AS is expected to generate 1.21 times more return on investment than Ocean Sun. However, Otovo AS is 1.21 times more volatile than Ocean Sun As. It trades about -0.03 of its potential returns per unit of risk. Ocean Sun As is currently generating about -0.05 per unit of risk. If you would invest 165.00 in Otovo AS on September 1, 2024 and sell it today you would lose (65.00) from holding Otovo AS or give up 39.39% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Otovo AS vs. Ocean Sun As
Performance |
| Timeline |
| Otovo AS |
| Ocean Sun As |
Otovo AS and Ocean Sun Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Otovo AS and Ocean Sun
The main advantage of trading using opposite Otovo AS and Ocean Sun positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Otovo AS position performs unexpectedly, Ocean Sun 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 Ocean Sun will offset losses from the drop in Ocean Sun's long position.The idea behind Otovo AS and Ocean Sun As 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.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 Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.
Other Complementary Tools
| Idea Analyzer Analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas | |
| Idea Optimizer Use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio | |
| Commodity Directory Find actively traded commodities issued by global exchanges | |
| Correlation Analysis Reduce portfolio risk simply by holding instruments which are not perfectly correlated | |
| Equity Search Search for actively traded equities including funds and ETFs from over 30 global markets |