Correlation Between LQwD FinTech and Ocumetics Technology

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

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

Diversification Opportunities for LQwD FinTech and Ocumetics Technology

-0.58

Correlation Coefficient

LQwD FinTech  Ocumetics Technology

Excellent diversification

The 3 months correlation between LQwD and Ocumetics is -0.58. Overlapping area represents the amount of risk that can be diversified away by holding LQwD FinTech Corp and Ocumetics Technology Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ocumetics Technology Corp and LQwD FinTech 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 LQwD FinTech Corp are associated (or correlated) with Ocumetics Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ocumetics Technology Corp has no effect on the direction of LQwD FinTech i.e., LQwD FinTech and Ocumetics Technology go up and down completely randomly.

Pair Corralation between LQwD FinTech and Ocumetics Technology

Assuming the 90 days trading horizon LQwD FinTech is expected to generate 4.07 times less return on investment than Ocumetics Technology. In addition to that, LQwD FinTech is 1.54 times more volatile than Ocumetics Technology Corp. It trades about 0.02 of its total potential returns per unit of risk. Ocumetics Technology Corp is currently generating about 0.13 per unit of volatility. If you would invest  30.00  in Ocumetics Technology Corp on October 6, 2024 and sell it today you would earn a total of  3.00  from holding Ocumetics Technology Corp or generate 10.0% return on investment over 90 days.

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

LQwD FinTech Corp  vs.  Ocumetics Technology Corp

LQwD FinTech Corp

Risk-Adjusted Performance

20 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in LQwD FinTech Corp are ranked lower than 20 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak basic indicators, LQwD FinTech showed solid returns over the last few months and may actually be approaching a breakup point.

Ocumetics Technology Corp

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Ocumetics Technology Corp are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak basic indicators, Ocumetics Technology may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with LQwD FinTech and Ocumetics Technology

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

The idea behind LQwD FinTech Corp and Ocumetics Technology 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 Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.