Correlation Between Take Two and Optima Health

Can any of the company-specific risk be diversified away by investing in both Take Two 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 Take Two and Optima Health into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Take Two Interactive Software and Optima Health plc, you can compare the effects of market volatilities on Take Two 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 Take Two with a short position of Optima Health. Check out your portfolio center. Please also check ongoing floating volatility patterns of Take Two and Optima Health.

Diversification Opportunities for Take Two and Optima Health

-0.46

Correlation Coefficient

Take Two  Optima Health

Very good diversification

The 3 months correlation between Take and Optima is -0.46. Overlapping area represents the amount of risk that can be diversified away by holding Take Two Interactive Software 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 Take Two 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 Take Two Interactive Software 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 Take Two i.e., Take Two and Optima Health go up and down completely randomly.

Pair Corralation between Take Two and Optima Health

Assuming the 90 days trading horizon Take Two Interactive Software is expected to generate 1.72 times more return on investment than Optima Health. However, Take Two is 1.72 times more volatile than Optima Health plc. It trades about 0.17 of its potential returns per unit of risk. Optima Health plc is currently generating about -0.17 per unit of risk. If you would invest  16,034  in Take Two Interactive Software on October 23, 2024 and sell it today you would earn a total of  2,605  from holding Take Two Interactive Software or generate 16.25% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	98.39%
Values	Daily Returns

Take Two Interactive Software  vs.  Optima Health plc

Take Two Interactive

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Take Two Interactive Software are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unsteady basic indicators, Take Two unveiled solid returns over the last few months and may actually be approaching a breakup point.

Optima Health plc

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Optima Health plc has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unsteady performance, the Stock's technical and fundamental indicators remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for the firm shareholders.

Pair Trading with Take Two and Optima Health

The main advantage of trading using opposite Take Two and Optima Health positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Take Two 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.

The idea behind Take Two Interactive Software and Optima Health plc 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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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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.