Correlation Between Global Helium and Optimi Health

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

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

Diversification Opportunities for Global Helium and Optimi Health

0.3

Correlation Coefficient

Global Helium  Optimi Health

Weak diversification

The 3 months correlation between Global and Optimi is 0.3. Overlapping area represents the amount of risk that can be diversified away by holding Global Helium Corp 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 Global Helium 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 Global Helium Corp 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 Global Helium i.e., Global Helium and Optimi Health go up and down completely randomly.

Pair Corralation between Global Helium and Optimi Health

Assuming the 90 days horizon Global Helium Corp is expected to generate 1.86 times more return on investment than Optimi Health. However, Global Helium is 1.86 times more volatile than Optimi Health Corp. It trades about 0.04 of its potential returns per unit of risk. Optimi Health Corp is currently generating about -0.02 per unit of risk. If you would invest  4.00  in Global Helium Corp on September 18, 2024 and sell it today you would lose (0.81) from holding Global Helium Corp or give up 20.25% of portfolio value over 90 days.

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

Global Helium Corp  vs.  Optimi Health Corp

Global Helium Corp

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Global Helium Corp are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Global Helium reported solid returns over the last few months and may actually be approaching a breakup point.

Optimi Health Corp

Risk-Adjusted Performance

0 of 100

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 latest unsteady performance, the Stock's technical indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Pair Trading with Global Helium and Optimi Health

The main advantage of trading using opposite Global Helium and Optimi Health positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Global Helium 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 Global Helium Corp 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 Portfolio Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.