Correlation Between Optimax Technology and Action Electronics

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Can any of the company-specific risk be diversified away by investing in both Optimax Technology and Action Electronics 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 Optimax Technology and Action Electronics into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Optimax Technology Corp and Action Electronics Co, you can compare the effects of market volatilities on Optimax Technology and Action Electronics 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 Optimax Technology with a short position of Action Electronics. Check out your portfolio center. Please also check ongoing floating volatility patterns of Optimax Technology and Action Electronics.

Diversification Opportunities for Optimax Technology and Action Electronics

OptimaxActionDiversified AwayOptimaxActionDiversified Away100%
0.23
  Correlation Coefficient

Modest diversification

The 3 months correlation between Optimax and Action is 0.23. Overlapping area represents the amount of risk that can be diversified away by holding Optimax Technology Corp and Action Electronics Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Action Electronics and Optimax Technology 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 Optimax Technology Corp are associated (or correlated) with Action Electronics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Action Electronics has no effect on the direction of Optimax Technology i.e., Optimax Technology and Action Electronics go up and down completely randomly.

Pair Corralation between Optimax Technology and Action Electronics

Assuming the 90 days trading horizon Optimax Technology Corp is expected to generate 0.81 times more return on investment than Action Electronics. However, Optimax Technology Corp is 1.23 times less risky than Action Electronics. It trades about -0.04 of its potential returns per unit of risk. Action Electronics Co is currently generating about -0.1 per unit of risk. If you would invest  3,150  in Optimax Technology Corp on November 21, 2024 and sell it today you would lose (160.00) from holding Optimax Technology Corp or give up 5.08% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthVery Weak
Accuracy100.0%
ValuesDaily Returns

Optimax Technology Corp  vs.  Action Electronics Co

 Performance 
JavaScript chart by amCharts 3.21.15Dec2025Feb -505101520
JavaScript chart by amCharts 3.21.153051 3024
       Timeline  
Optimax Technology Corp 

Risk-Adjusted Performance

Very Weak

 
Weak
 
Strong
Over the last 90 days Optimax Technology Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable basic indicators, Optimax Technology is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.
JavaScript chart by amCharts 3.21.15DecJanFebJanFeb303132333435
Action Electronics 

Risk-Adjusted Performance

Very Weak

 
Weak
 
Strong
Over the last 90 days Action Electronics Co 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 March 2025. The latest fuss may also be a sign of long-term up-swing for the venture sophisticated investors.
JavaScript chart by amCharts 3.21.15DecJanFebJanFeb171819202122

Optimax Technology and Action Electronics Volatility Contrast

   Predicted Return Density   
JavaScript chart by amCharts 3.21.15-3.23-2.42-1.61-0.8-0.01350.741.512.283.053.82 0.060.070.080.090.10
JavaScript chart by amCharts 3.21.153051 3024
       Returns  

Pair Trading with Optimax Technology and Action Electronics

The main advantage of trading using opposite Optimax Technology and Action Electronics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Optimax Technology position performs unexpectedly, Action Electronics 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 Action Electronics will offset losses from the drop in Action Electronics' long position.
The idea behind Optimax Technology Corp and Action Electronics Co 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.

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