Correlation Between BankInvest Optima and Cessatech

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

By analyzing existing cross correlation between BankInvest Optima 10 and Cessatech AS, you can compare the effects of market volatilities on BankInvest Optima and Cessatech 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 BankInvest Optima with a short position of Cessatech. Check out your portfolio center. Please also check ongoing floating volatility patterns of BankInvest Optima and Cessatech.

Diversification Opportunities for BankInvest Optima and Cessatech

0.25

Correlation Coefficient

BankInvest Optima  Cessatech

Modest diversification

The 3 months correlation between BankInvest and Cessatech is 0.25. Overlapping area represents the amount of risk that can be diversified away by holding BankInvest Optima 10 and Cessatech AS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cessatech AS and BankInvest Optima 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 BankInvest Optima 10 are associated (or correlated) with Cessatech. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cessatech AS has no effect on the direction of BankInvest Optima i.e., BankInvest Optima and Cessatech go up and down completely randomly.

Pair Corralation between BankInvest Optima and Cessatech

Assuming the 90 days trading horizon BankInvest Optima 10 is expected to generate 0.07 times more return on investment than Cessatech. However, BankInvest Optima 10 is 13.58 times less risky than Cessatech. It trades about -0.18 of its potential returns per unit of risk. Cessatech AS is currently generating about -0.05 per unit of risk. If you would invest  10,390  in BankInvest Optima 10 on October 9, 2024 and sell it today you would lose (70.00) from holding BankInvest Optima 10 or give up 0.67% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	88.24%
Values	Daily Returns

BankInvest Optima 10  vs.  Cessatech AS

BankInvest Optima

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in BankInvest Optima 10 are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound fundamental indicators, BankInvest Optima is not utilizing all of its potentials. The recent stock price tumult, may contribute to shorter-term losses for the shareholders.

Cessatech AS

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Cessatech AS has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's fundamental indicators remain rather sound which may send shares a bit higher in February 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Pair Trading with BankInvest Optima and Cessatech

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

The idea behind BankInvest Optima 10 and Cessatech AS 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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.