Correlation Between Bunge and Optimi Health

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

By analyzing existing cross correlation between Bunge Limited and Optimi Health Corp, you can compare the effects of market volatilities on Bunge and Optimi 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 Bunge with a short position of Optimi Health. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bunge and Optimi Health.

Diversification Opportunities for Bunge and Optimi Health

0.32

Correlation Coefficient

Bunge  Optimi Health

Weak diversification

The 3 months correlation between Bunge and Optimi is 0.32. Overlapping area represents the amount of risk that can be diversified away by holding Bunge Limited and Optimi Health Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Optimi Health Corp and Bunge 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 Bunge Limited are associated (or correlated) with Optimi Health. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Optimi Health Corp has no effect on the direction of Bunge i.e., Bunge and Optimi Health go up and down completely randomly.

Pair Corralation between Bunge and Optimi Health

Allowing for the 90-day total investment horizon Bunge Limited is expected to under-perform the Optimi Health. But the stock apears to be less risky and, when comparing its historical volatility, Bunge Limited is 4.37 times less risky than Optimi Health. The stock trades about -0.15 of its potential returns per unit of risk. The Optimi Health Corp is currently generating about -0.03 of returns per unit of risk over similar time horizon. If you would invest  23.00  in Optimi Health Corp on December 5, 2024 and sell it today you would lose (10.00) from holding Optimi Health Corp or give up 43.48% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

Bunge Limited  vs.  Optimi Health Corp

Bunge Limited

Risk-Adjusted Performance

Very Weak

Over the last 90 days Bunge Limited has generated negative risk-adjusted returns adding no value to investors with long positions. Despite unfluctuating performance in the last few months, the Stock's technical and fundamental indicators remain nearly stable which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Optimi Health Corp

Risk-Adjusted Performance

Very Weak

Over the last 90 days Optimi Health Corp has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable technical indicators, Optimi Health is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Bunge and Optimi Health

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

The idea behind Bunge Limited and Optimi Health 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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.