Correlation Between PureTech Health and Optima Health
Can any of the company-specific risk be diversified away by investing in both PureTech Health and Optima Health 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 PureTech Health and Optima Health into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between PureTech Health plc and Optima Health plc, you can compare the effects of market volatilities on PureTech Health and Optima Health 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 PureTech Health with a short position of Optima Health. Check out your portfolio center. Please also check ongoing floating volatility patterns of PureTech Health and Optima Health.
Diversification Opportunities for PureTech Health and Optima Health
0.72 | Correlation Coefficient |
Poor diversification
The 3 months correlation between PureTech and Optima is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding PureTech Health plc and Optima Health plc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Optima Health plc and PureTech 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 PureTech Health plc are associated (or correlated) with Optima Health. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Optima Health plc has no effect on the direction of PureTech Health i.e., PureTech Health and Optima Health go up and down completely randomly.
Pair Corralation between PureTech Health and Optima Health
Assuming the 90 days trading horizon PureTech Health plc is expected to under-perform the Optima Health. In addition to that, PureTech Health is 2.27 times more volatile than Optima Health plc. It trades about -0.01 of its total potential returns per unit of risk. Optima Health plc is currently generating about 0.23 per unit of volatility. If you would invest 14,300 in Optima Health plc on November 4, 2024 and sell it today you would earn a total of 600.00 from holding Optima Health plc or generate 4.2% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
PureTech Health plc vs. Optima Health plc
Performance |
| Timeline |
| PureTech Health plc |
| Optima Health plc |
PureTech Health and Optima Health Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with PureTech Health and Optima Health
The main advantage of trading using opposite PureTech Health and Optima Health positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if PureTech Health position performs unexpectedly, Optima Health 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 Optima Health will offset losses from the drop in Optima Health's long position.| PureTech Health vs. Commerzbank AG | PureTech Health vs. St Galler Kantonalbank | PureTech Health vs. Foresight Environmental Infrastructure | PureTech Health vs. JLEN Environmental Assets |
| Optima Health vs. Wheaton Precious Metals | Optima Health vs. GreenX Metals | Optima Health vs. Endeavour Mining Corp | Optima Health vs. Cairo Communication SpA |
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 Portfolio Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.
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