Correlation Between Optronics Technologies and Intracom Constructions

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

By analyzing existing cross correlation between Optronics Technologies SA and Intracom Constructions Societe, you can compare the effects of market volatilities on Optronics Technologies and Intracom Constructions 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 Optronics Technologies with a short position of Intracom Constructions. Check out your portfolio center. Please also check ongoing floating volatility patterns of Optronics Technologies and Intracom Constructions.

Diversification Opportunities for Optronics Technologies and Intracom Constructions

-0.69

Correlation Coefficient

Optronics Technologies  Intracom Constructions

Excellent diversification

The 3 months correlation between Optronics and Intracom is -0.69. Overlapping area represents the amount of risk that can be diversified away by holding Optronics Technologies SA and Intracom Constructions Societe in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Intracom Constructions and Optronics 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 Optronics Technologies SA are associated (or correlated) with Intracom Constructions. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Intracom Constructions has no effect on the direction of Optronics Technologies i.e., Optronics Technologies and Intracom Constructions go up and down completely randomly.

Pair Corralation between Optronics Technologies and Intracom Constructions

Assuming the 90 days trading horizon Optronics Technologies SA is expected to under-perform the Intracom Constructions. But the stock apears to be less risky and, when comparing its historical volatility, Optronics Technologies SA is 1.65 times less risky than Intracom Constructions. The stock trades about -0.12 of its potential returns per unit of risk. The Intracom Constructions Societe is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest  489.00  in Intracom Constructions Societe on December 30, 2024 and sell it today you would earn a total of  41.00  from holding Intracom Constructions Societe or generate 8.38% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	98.39%
Values	Daily Returns

Optronics Technologies SA  vs.  Intracom Constructions Societe

Optronics Technologies

Risk-Adjusted Performance

Very Weak

Over the last 90 days Optronics Technologies SA has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Intracom Constructions

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Intracom Constructions Societe are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Intracom Constructions may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Optronics Technologies and Intracom Constructions

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

The idea behind Optronics Technologies SA and Intracom Constructions Societe 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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.