Correlation Between Optima Health and Glencore PLC

Can any of the company-specific risk be diversified away by investing in both Optima Health and Glencore PLC 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 Glencore PLC 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 Glencore PLC, you can compare the effects of market volatilities on Optima Health and Glencore PLC 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 Glencore PLC. Check out your portfolio center. Please also check ongoing floating volatility patterns of Optima Health and Glencore PLC.

Diversification Opportunities for Optima Health and Glencore PLC

0.13

Correlation Coefficient

Optima Health  Glencore PLC

Average diversification

The 3 months correlation between Optima and Glencore is 0.13. Overlapping area represents the amount of risk that can be diversified away by holding Optima Health plc and Glencore PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Glencore PLC 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 Glencore PLC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Glencore PLC has no effect on the direction of Optima Health i.e., Optima Health and Glencore PLC go up and down completely randomly.

Pair Corralation between Optima Health and Glencore PLC

Assuming the 90 days trading horizon Optima Health plc is expected to under-perform the Glencore PLC. But the stock apears to be less risky and, when comparing its historical volatility, Optima Health plc is 1.37 times less risky than Glencore PLC. The stock trades about -0.05 of its potential returns per unit of risk. The Glencore PLC is currently generating about -0.01 of returns per unit of risk over similar time horizon. If you would invest  39,504  in Glencore PLC on October 3, 2024 and sell it today you would lose (4,164) from holding Glencore PLC or give up 10.54% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	18.09%
Values	Daily Returns

Optima Health plc  vs.  Glencore PLC

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 rather sound technical and fundamental indicators, Optima Health is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Glencore PLC

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Glencore PLC has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unsteady performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in February 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Pair Trading with Optima Health and Glencore PLC

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

The idea behind Optima Health plc and Glencore PLC 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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.