Correlation Between Optex Systems and Saker Aviation

Can any of the company-specific risk be diversified away by investing in both Optex Systems and Saker Aviation 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 Saker Aviation 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 Saker Aviation Services, you can compare the effects of market volatilities on Optex Systems and Saker Aviation 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 Saker Aviation. Check out your portfolio center. Please also check ongoing floating volatility patterns of Optex Systems and Saker Aviation.

Diversification Opportunities for Optex Systems and Saker Aviation

0.54

Correlation Coefficient

Optex Systems  Saker Aviation

Very weak diversification

The 3 months correlation between Optex and Saker is 0.54. Overlapping area represents the amount of risk that can be diversified away by holding Optex Systems Holdings, and Saker Aviation Services in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Saker Aviation Services 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 Saker Aviation. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Saker Aviation Services has no effect on the direction of Optex Systems i.e., Optex Systems and Saker Aviation go up and down completely randomly.

Pair Corralation between Optex Systems and Saker Aviation

Given the investment horizon of 90 days Optex Systems Holdings, is expected to generate 0.82 times more return on investment than Saker Aviation. However, Optex Systems Holdings, is 1.22 times less risky than Saker Aviation. It trades about 0.07 of its potential returns per unit of risk. Saker Aviation Services is currently generating about 0.04 per unit of risk. If you would invest  300.00  in Optex Systems Holdings, on October 26, 2024 and sell it today you would earn a total of  379.00  from holding Optex Systems Holdings, or generate 126.33% return on investment over 90 days.

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

Optex Systems Holdings,  vs.  Saker Aviation Services

Optex Systems Holdings,

Risk-Adjusted Performance

0 of 100

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 February 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Saker Aviation Services

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Optex Systems and Saker Aviation

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

The idea behind Optex Systems Holdings, and Saker Aviation Services 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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.