Correlation Between Optima Prima and Tera Data

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

By analyzing existing cross correlation between Optima Prima Metal and Tera Data Indonusa, you can compare the effects of market volatilities on Optima Prima and Tera Data 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 Optima Prima with a short position of Tera Data. Check out your portfolio center. Please also check ongoing floating volatility patterns of Optima Prima and Tera Data.

Diversification Opportunities for Optima Prima and Tera Data

-0.48

Correlation Coefficient

Optima Prima  Tera Data

Very good diversification

The 3 months correlation between Optima and Tera is -0.48. Overlapping area represents the amount of risk that can be diversified away by holding Optima Prima Metal and Tera Data Indonusa in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tera Data Indonusa and Optima Prima 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 Optima Prima Metal are associated (or correlated) with Tera Data. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tera Data Indonusa has no effect on the direction of Optima Prima i.e., Optima Prima and Tera Data go up and down completely randomly.

Pair Corralation between Optima Prima and Tera Data

Assuming the 90 days trading horizon Optima Prima Metal is expected to under-perform the Tera Data. In addition to that, Optima Prima is 1.04 times more volatile than Tera Data Indonusa. It trades about -0.02 of its total potential returns per unit of risk. Tera Data Indonusa is currently generating about 0.0 per unit of volatility. If you would invest  16,270  in Tera Data Indonusa on October 11, 2024 and sell it today you would lose (4,370) from holding Tera Data Indonusa or give up 26.86% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	99.79%
Values	Daily Returns

Optima Prima Metal  vs.  Tera Data Indonusa

Optima Prima Metal

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Optima Prima Metal has generated negative risk-adjusted returns adding no value to investors with long positions. Despite conflicting performance in the last few months, the Stock's forward-looking signals remain quite persistent which may send shares a bit higher in February 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Tera Data Indonusa

Risk-Adjusted Performance

0 of 100

Weak

Over the last 90 days Tera Data Indonusa has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent forward-looking signals, Tera Data is not utilizing all of its potentials. The latest stock price mess, may contribute to short-term losses for the institutional investors.

Pair Trading with Optima Prima and Tera Data

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

The idea behind Optima Prima Metal and Tera Data Indonusa 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.

Check out your portfolio center.

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 File Import module to quickly import all of your third-party portfolios from your local drive in csv format.