Correlation Between Optical Cable and Mobilicom Limited

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

By analyzing existing cross correlation between Optical Cable and Mobilicom Limited Warrants, you can compare the effects of market volatilities on Optical Cable and Mobilicom Limited 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 Optical Cable with a short position of Mobilicom Limited. Check out your portfolio center. Please also check ongoing floating volatility patterns of Optical Cable and Mobilicom Limited.

Diversification Opportunities for Optical Cable and Mobilicom Limited

-0.08

Correlation Coefficient

Optical Cable  Mobilicom Limited

Good diversification

The 3 months correlation between Optical and Mobilicom is -0.08. Overlapping area represents the amount of risk that can be diversified away by holding Optical Cable and Mobilicom Limited Warrants in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mobilicom Limited and Optical Cable 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 Optical Cable are associated (or correlated) with Mobilicom Limited. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mobilicom Limited has no effect on the direction of Optical Cable i.e., Optical Cable and Mobilicom Limited go up and down completely randomly.

Pair Corralation between Optical Cable and Mobilicom Limited

Considering the 90-day investment horizon Optical Cable is expected to under-perform the Mobilicom Limited. But the stock apears to be less risky and, when comparing its historical volatility, Optical Cable is 71.12 times less risky than Mobilicom Limited. The stock trades about -0.1 of its potential returns per unit of risk. The Mobilicom Limited Warrants is currently generating about 0.18 of returns per unit of risk over similar time horizon. If you would invest  11.00  in Mobilicom Limited Warrants on September 3, 2024 and sell it today you would earn a total of  14.00  from holding Mobilicom Limited Warrants or generate 127.27% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	50.0%
Values	Daily Returns

Optical Cable  vs.  Mobilicom Limited Warrants

Optical Cable

Risk-Adjusted Performance

0 of 100

Very Weak

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

Mobilicom Limited

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Mobilicom Limited Warrants are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. In spite of fairly uncertain fundamental drivers, Mobilicom Limited showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Optical Cable and Mobilicom Limited

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

The idea behind Optical Cable and Mobilicom Limited Warrants 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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..