Correlation Between Optima Health and Eastinco Mining

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

By analyzing existing cross correlation between Optima Health plc and Eastinco Mining Exploration, you can compare the effects of market volatilities on Optima Health and Eastinco Mining 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 Health with a short position of Eastinco Mining. Check out your portfolio center. Please also check ongoing floating volatility patterns of Optima Health and Eastinco Mining.

Diversification Opportunities for Optima Health and Eastinco Mining

0.17

Correlation Coefficient

Optima Health  Eastinco Mining

Average diversification

The 3 months correlation between Optima and Eastinco is 0.17. Overlapping area represents the amount of risk that can be diversified away by holding Optima Health plc and Eastinco Mining Exploration in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Eastinco Mining Expl and Optima Health 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 Health plc are associated (or correlated) with Eastinco Mining. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Eastinco Mining Expl has no effect on the direction of Optima Health i.e., Optima Health and Eastinco Mining go up and down completely randomly.

Pair Corralation between Optima Health and Eastinco Mining

Assuming the 90 days trading horizon Optima Health plc is expected to under-perform the Eastinco Mining. But the stock apears to be less risky and, when comparing its historical volatility, Optima Health plc is 231.48 times less risky than Eastinco Mining. The stock trades about -0.07 of its potential returns per unit of risk. The Eastinco Mining Exploration is currently generating about 0.27 of returns per unit of risk over similar time horizon. If you would invest  8,500  in Eastinco Mining Exploration on October 11, 2024 and sell it today you would lose (3,800) from holding Eastinco Mining Exploration or give up 44.71% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	14.72%
Values	Daily Returns

Optima Health plc  vs.  Eastinco Mining Exploration

Optima Health plc

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Optima Health plc has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest uncertain performance, the Stock's technical and fundamental indicators remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for the firm shareholders.

Eastinco Mining Expl

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Eastinco Mining Exploration has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unsteady performance, the Stock's technical and fundamental indicators remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for the firm shareholders.

Pair Trading with Optima Health and Eastinco Mining

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

The idea behind Optima Health plc and Eastinco Mining Exploration 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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.