Correlation Between Bce and Ocumetics Technology

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

By analyzing existing cross correlation between Bce Inc Pref and Ocumetics Technology Corp, you can compare the effects of market volatilities on Bce and Ocumetics Technology 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 Bce with a short position of Ocumetics Technology. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bce and Ocumetics Technology.

Diversification Opportunities for Bce and Ocumetics Technology

0.27

Correlation Coefficient

Bce  Ocumetics Technology

Modest diversification

The 3 months correlation between Bce and Ocumetics is 0.27. Overlapping area represents the amount of risk that can be diversified away by holding Bce Inc Pref and Ocumetics Technology Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ocumetics Technology Corp and Bce 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 Bce Inc Pref are associated (or correlated) with Ocumetics Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ocumetics Technology Corp has no effect on the direction of Bce i.e., Bce and Ocumetics Technology go up and down completely randomly.

Pair Corralation between Bce and Ocumetics Technology

Assuming the 90 days trading horizon Bce Inc Pref is expected to under-perform the Ocumetics Technology. But the preferred stock apears to be less risky and, when comparing its historical volatility, Bce Inc Pref is 6.76 times less risky than Ocumetics Technology. The preferred stock trades about -0.05 of its potential returns per unit of risk. The Ocumetics Technology Corp is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest  34.00  in Ocumetics Technology Corp on September 25, 2024 and sell it today you would lose (4.00) from holding Ocumetics Technology Corp or give up 11.76% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	99.6%
Values	Daily Returns

Bce Inc Pref  vs.  Ocumetics Technology Corp

Bce Inc Pref

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Bce Inc Pref has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong technical and fundamental indicators, Bce is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.

Ocumetics Technology Corp

Risk-Adjusted Performance

0 of 100

Weak

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

Pair Trading with Bce and Ocumetics Technology

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

The idea behind Bce Inc Pref and Ocumetics Technology 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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.