Correlation Between Elton International and Optima Bank

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

By analyzing existing cross correlation between Elton International Trading and Optima bank SA, you can compare the effects of market volatilities on Elton International and Optima Bank 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 Elton International with a short position of Optima Bank. Check out your portfolio center. Please also check ongoing floating volatility patterns of Elton International and Optima Bank.

Diversification Opportunities for Elton International and Optima Bank

0.04

Correlation Coefficient

Elton International  Optima Bank

Significant diversification

The 3 months correlation between Elton and Optima is 0.04. Overlapping area represents the amount of risk that can be diversified away by holding Elton International Trading and Optima bank SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Optima bank SA and Elton International 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 Elton International Trading are associated (or correlated) with Optima Bank. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Optima bank SA has no effect on the direction of Elton International i.e., Elton International and Optima Bank go up and down completely randomly.

Pair Corralation between Elton International and Optima Bank

Assuming the 90 days trading horizon Elton International Trading is expected to generate 1.52 times more return on investment than Optima Bank. However, Elton International is 1.52 times more volatile than Optima bank SA. It trades about 0.08 of its potential returns per unit of risk. Optima bank SA is currently generating about 0.06 per unit of risk. If you would invest  172.00  in Elton International Trading on October 27, 2024 and sell it today you would earn a total of  12.00  from holding Elton International Trading or generate 6.98% return on investment over 90 days.

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

Elton International Trading  vs.  Optima bank SA

Elton International

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Elton International Trading are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Elton International may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Optima bank SA

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Optima bank SA are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, Optima Bank is not utilizing all of its potentials. The newest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Elton International and Optima Bank

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

The idea behind Elton International Trading and Optima bank SA 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 Valuation module to check real value of public entities based on technical and fundamental data.