Correlation Between Optex Systems and Novocure

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

By analyzing existing cross correlation between Optex Systems Holdings, and Novocure, you can compare the effects of market volatilities on Optex Systems and Novocure 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 Optex Systems with a short position of Novocure. Check out your portfolio center. Please also check ongoing floating volatility patterns of Optex Systems and Novocure.

Diversification Opportunities for Optex Systems and Novocure

0.84

Correlation Coefficient

Optex Systems  Novocure

Very poor diversification

The 3 months correlation between Optex and Novocure is 0.84. Overlapping area represents the amount of risk that can be diversified away by holding Optex Systems Holdings, and Novocure in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Novocure and Optex Systems 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 Optex Systems Holdings, are associated (or correlated) with Novocure. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Novocure has no effect on the direction of Optex Systems i.e., Optex Systems and Novocure go up and down completely randomly.

Pair Corralation between Optex Systems and Novocure

Given the investment horizon of 90 days Optex Systems Holdings, is expected to generate 0.8 times more return on investment than Novocure. However, Optex Systems Holdings, is 1.26 times less risky than Novocure. It trades about -0.13 of its potential returns per unit of risk. Novocure is currently generating about -0.29 per unit of risk. If you would invest  719.00  in Optex Systems Holdings, on December 26, 2024 and sell it today you would lose (133.00) from holding Optex Systems Holdings, or give up 18.5% of portfolio value over 90 days.

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

Optex Systems Holdings,  vs.  Novocure

Optex Systems Holdings,

Risk-Adjusted Performance

Very Weak

Over the last 90 days Optex Systems Holdings, has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in April 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Novocure

Risk-Adjusted Performance

Very Weak

Over the last 90 days Novocure has generated negative risk-adjusted returns adding no value to investors with long positions. Even with weak performance in the last few months, the Stock's fundamental indicators remain relatively invariable which may send shares a bit higher in April 2025. The latest agitation may also be a sign of long-running up-swing for the enterprise retail investors.

Pair Trading with Optex Systems and Novocure

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

The idea behind Optex Systems Holdings, and Novocure 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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.