Correlation Between Optronics Technologies and N Leventeris

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

Diversification Opportunities for Optronics Technologies and N Leventeris

0.61

Correlation Coefficient

Optronics Technologies  N Leventeris

Poor diversification

The 3 months correlation between Optronics and LEBEP is 0.61. Overlapping area represents the amount of risk that can be diversified away by holding Optronics Technologies SA and N Leventeris SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on N Leventeris SA 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 N Leventeris. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of N Leventeris SA has no effect on the direction of Optronics Technologies i.e., Optronics Technologies and N Leventeris go up and down completely randomly.

Pair Corralation between Optronics Technologies and N Leventeris

Assuming the 90 days trading horizon Optronics Technologies SA is expected to generate 0.19 times more return on investment than N Leventeris. However, Optronics Technologies SA is 5.29 times less risky than N Leventeris. It trades about -0.12 of its potential returns per unit of risk. N Leventeris SA is currently generating about -0.05 per unit of risk. If you would invest  148.00  in Optronics Technologies SA on December 25, 2024 and sell it today you would lose (10.00) from holding Optronics Technologies SA or give up 6.76% of portfolio value over 90 days.

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

Optronics Technologies SA  vs.  N Leventeris SA

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.

N Leventeris SA

Risk-Adjusted Performance

Very Weak

Over the last 90 days N Leventeris SA has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain somewhat strong which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with Optronics Technologies and N Leventeris

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

The idea behind Optronics Technologies SA and N Leventeris SA 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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.