Correlation Between Oracle and Optimi Health

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

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

Diversification Opportunities for Oracle and Optimi Health

-0.63

Correlation Coefficient

Oracle  Optimi Health

Excellent diversification

The 3 months correlation between Oracle and Optimi is -0.63. Overlapping area represents the amount of risk that can be diversified away by holding Oracle and Optimi Health Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Optimi Health Corp and Oracle 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 Oracle are associated (or correlated) with Optimi Health. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Optimi Health Corp has no effect on the direction of Oracle i.e., Oracle and Optimi Health go up and down completely randomly.

Pair Corralation between Oracle and Optimi Health

Given the investment horizon of 90 days Oracle is expected to under-perform the Optimi Health. But the stock apears to be less risky and, when comparing its historical volatility, Oracle is 2.83 times less risky than Optimi Health. The stock trades about -0.17 of its potential returns per unit of risk. The Optimi Health Corp is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest  14.00  in Optimi Health Corp on September 18, 2024 and sell it today you would earn a total of  2.00  from holding Optimi Health Corp or generate 14.29% return on investment over 90 days.

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

Oracle  vs.  Optimi Health Corp

Oracle

Risk-Adjusted Performance

3 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Oracle are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite quite persistent fundamental indicators, Oracle is not utilizing all of its potentials. The latest stock price mess, may contribute to short-term losses for the institutional investors.

Optimi Health Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Optimi Health Corp has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest unsteady performance, the Stock's technical indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Pair Trading with Oracle and Optimi Health

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

The idea behind Oracle and Optimi Health Corp 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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.