Correlation Between I Chiun and Optotech Corp

Can any of the company-specific risk be diversified away by investing in both I Chiun and Optotech Corp 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 I Chiun and Optotech Corp into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between I Chiun Precision Industry and Optotech Corp, you can compare the effects of market volatilities on I Chiun and Optotech Corp 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 I Chiun with a short position of Optotech Corp. Check out your portfolio center. Please also check ongoing floating volatility patterns of I Chiun and Optotech Corp.

Diversification Opportunities for I Chiun and Optotech Corp

-0.16

Correlation Coefficient

I Chiun  Optotech Corp

Good diversification

The 3 months correlation between 2486 and Optotech is -0.16. Overlapping area represents the amount of risk that can be diversified away by holding I Chiun Precision Industry and Optotech Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Optotech Corp and I Chiun 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 I Chiun Precision Industry are associated (or correlated) with Optotech Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Optotech Corp has no effect on the direction of I Chiun i.e., I Chiun and Optotech Corp go up and down completely randomly.

Pair Corralation between I Chiun and Optotech Corp

Assuming the 90 days trading horizon I Chiun Precision Industry is expected to generate 1.81 times more return on investment than Optotech Corp. However, I Chiun is 1.81 times more volatile than Optotech Corp. It trades about 0.16 of its potential returns per unit of risk. Optotech Corp is currently generating about -0.17 per unit of risk. If you would invest  9,140  in I Chiun Precision Industry on September 14, 2024 and sell it today you would earn a total of  3,160  from holding I Chiun Precision Industry or generate 34.57% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.41%
Values	Daily Returns

I Chiun Precision Industry  vs.  Optotech Corp

I Chiun Precision

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in I Chiun Precision Industry are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, I Chiun showed solid returns over the last few months and may actually be approaching a breakup point.

Optotech Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Optotech Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of abnormal performance in the last few months, the Stock's basic indicators remain fairly stable which may send shares a bit higher in January 2025. The latest fuss may also be a sign of long-term up-swing for the venture sophisticated investors.

Pair Trading with I Chiun and Optotech Corp

The main advantage of trading using opposite I Chiun and Optotech Corp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if I Chiun position performs unexpectedly, Optotech Corp 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 Optotech Corp will offset losses from the drop in Optotech Corp's long position.

The idea behind I Chiun Precision Industry and Optotech Corp 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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.