Correlation Between Optima Health and Moneysupermarket
Can any of the company-specific risk be diversified away by investing in both Optima Health and Moneysupermarket 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 Moneysupermarket 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 MoneysupermarketCom Group PLC, you can compare the effects of market volatilities on Optima Health and Moneysupermarket 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 Moneysupermarket. Check out your portfolio center. Please also check ongoing floating volatility patterns of Optima Health and Moneysupermarket.
Diversification Opportunities for Optima Health and Moneysupermarket
0.53 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Optima and Moneysupermarket is 0.53. Overlapping area represents the amount of risk that can be diversified away by holding Optima Health plc and MoneysupermarketCom Group PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MoneysupermarketCom 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 Moneysupermarket. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MoneysupermarketCom has no effect on the direction of Optima Health i.e., Optima Health and Moneysupermarket go up and down completely randomly.
Pair Corralation between Optima Health and Moneysupermarket
Assuming the 90 days trading horizon Optima Health plc is expected to generate 1.2 times more return on investment than Moneysupermarket. However, Optima Health is 1.2 times more volatile than MoneysupermarketCom Group PLC. It trades about 0.19 of its potential returns per unit of risk. MoneysupermarketCom Group PLC is currently generating about 0.0 per unit of risk. If you would invest 15,250 in Optima Health plc on December 1, 2024 and sell it today you would earn a total of 3,000 from holding Optima Health plc or generate 19.67% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Weak |
Accuracy | 100.0% |
Values | Daily Returns |
Optima Health plc vs. MoneysupermarketCom Group PLC
Performance |
Timeline |
Optima Health plc |
MoneysupermarketCom |
Optima Health and Moneysupermarket Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Optima Health and Moneysupermarket
The main advantage of trading using opposite Optima Health and Moneysupermarket positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Optima Health position performs unexpectedly, Moneysupermarket 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 Moneysupermarket will offset losses from the drop in Moneysupermarket's long position.Optima Health vs. Aptitude Software Group | Optima Health vs. Check Point Software | Optima Health vs. Software Circle plc | Optima Health vs. Vitec Software Group |
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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 Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.
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