Correlation Between OptiCept Technologies and Neola Medical

Can any of the company-specific risk be diversified away by investing in both OptiCept Technologies and Neola Medical 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 OptiCept Technologies and Neola Medical into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between OptiCept Technologies AB and Neola Medical AB, you can compare the effects of market volatilities on OptiCept Technologies and Neola Medical 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 OptiCept Technologies with a short position of Neola Medical. Check out your portfolio center. Please also check ongoing floating volatility patterns of OptiCept Technologies and Neola Medical.

Diversification Opportunities for OptiCept Technologies and Neola Medical

-0.1

Correlation Coefficient

OptiCept Technologies  Neola Medical

Good diversification

The 3 months correlation between OptiCept and Neola is -0.1. Overlapping area represents the amount of risk that can be diversified away by holding OptiCept Technologies AB and Neola Medical AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Neola Medical AB and OptiCept Technologies 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 OptiCept Technologies AB are associated (or correlated) with Neola Medical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Neola Medical AB has no effect on the direction of OptiCept Technologies i.e., OptiCept Technologies and Neola Medical go up and down completely randomly.

Pair Corralation between OptiCept Technologies and Neola Medical

Assuming the 90 days trading horizon OptiCept Technologies AB is expected to under-perform the Neola Medical. But the stock apears to be less risky and, when comparing its historical volatility, OptiCept Technologies AB is 1.11 times less risky than Neola Medical. The stock trades about 0.0 of its potential returns per unit of risk. The Neola Medical AB is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest  200.00  in Neola Medical AB on December 23, 2024 and sell it today you would earn a total of  60.00  from holding Neola Medical AB or generate 30.0% return on investment over 90 days.

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

OptiCept Technologies AB  vs.  Neola Medical AB

OptiCept Technologies

Risk-Adjusted Performance

Very Weak

Over the last 90 days OptiCept Technologies AB has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, OptiCept Technologies is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

Neola Medical AB

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Neola Medical AB are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Neola Medical unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with OptiCept Technologies and Neola Medical

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

The idea behind OptiCept Technologies AB and Neola Medical AB 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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.