Correlation Between Medical Facilities and Oculus VisionTech

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

By analyzing existing cross correlation between Medical Facilities and Oculus VisionTech, you can compare the effects of market volatilities on Medical Facilities and Oculus VisionTech 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 Medical Facilities with a short position of Oculus VisionTech. Check out your portfolio center. Please also check ongoing floating volatility patterns of Medical Facilities and Oculus VisionTech.

Diversification Opportunities for Medical Facilities and Oculus VisionTech

0.42

Correlation Coefficient

Medical Facilities  Oculus VisionTech

Very weak diversification

The 3 months correlation between Medical and Oculus is 0.42. Overlapping area represents the amount of risk that can be diversified away by holding Medical Facilities and Oculus VisionTech in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Oculus VisionTech and Medical Facilities 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 Medical Facilities are associated (or correlated) with Oculus VisionTech. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Oculus VisionTech has no effect on the direction of Medical Facilities i.e., Medical Facilities and Oculus VisionTech go up and down completely randomly.

Pair Corralation between Medical Facilities and Oculus VisionTech

Assuming the 90 days horizon Medical Facilities is expected to generate 22.05 times less return on investment than Oculus VisionTech. But when comparing it to its historical volatility, Medical Facilities is 10.24 times less risky than Oculus VisionTech. It trades about 0.06 of its potential returns per unit of risk. Oculus VisionTech is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest  7.00  in Oculus VisionTech on October 11, 2024 and sell it today you would earn a total of  1.50  from holding Oculus VisionTech or generate 21.43% return on investment over 90 days.

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

Medical Facilities  vs.  Oculus VisionTech

Medical Facilities

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Medical Facilities are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating basic indicators, Medical Facilities may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Oculus VisionTech

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Oculus VisionTech are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak basic indicators, Oculus VisionTech showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Medical Facilities and Oculus VisionTech

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

The idea behind Medical Facilities and Oculus VisionTech 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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..