Correlation Between Optima Health and Oakley Capital

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

Diversification Opportunities for Optima Health and Oakley Capital

-0.92

Correlation Coefficient

Optima Health  Oakley Capital

Pay attention - limited upside

The 3 months correlation between Optima and Oakley is -0.92. Overlapping area represents the amount of risk that can be diversified away by holding Optima Health plc and Oakley Capital Investments in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Oakley Capital Inves 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 Oakley Capital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Oakley Capital Inves has no effect on the direction of Optima Health i.e., Optima Health and Oakley Capital go up and down completely randomly.

Pair Corralation between Optima Health and Oakley Capital

Assuming the 90 days trading horizon Optima Health plc is expected to generate 2.11 times more return on investment than Oakley Capital. However, Optima Health is 2.11 times more volatile than Oakley Capital Investments. It trades about 0.31 of its potential returns per unit of risk. Oakley Capital Investments is currently generating about -0.17 per unit of risk. If you would invest  14,400  in Optima Health plc on December 22, 2024 and sell it today you would earn a total of  5,100  from holding Optima Health plc or generate 35.42% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Significant
Accuracy	100.0%
Values	Daily Returns

Optima Health plc  vs.  Oakley Capital Investments

Optima Health plc

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Optima Health plc are ranked lower than 24 (%) of all global equities and portfolios over the last 90 days. In spite of rather uncertain technical and fundamental indicators, Optima Health exhibited solid returns over the last few months and may actually be approaching a breakup point.

Oakley Capital Inves

Risk-Adjusted Performance

Very Weak

Over the last 90 days Oakley Capital Investments 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.

Pair Trading with Optima Health and Oakley Capital

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

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