Correlation Between Opus Small and OVS SpA

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

By analyzing existing cross correlation between Opus Small Cap and OVS SpA, you can compare the effects of market volatilities on Opus Small and OVS SpA 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 Opus Small with a short position of OVS SpA. Check out your portfolio center. Please also check ongoing floating volatility patterns of Opus Small and OVS SpA.

Diversification Opportunities for Opus Small and OVS SpA

0.96

Correlation Coefficient

Opus Small  OVS SpA

Almost no diversification

The 3 months correlation between Opus and OVS is 0.96. Overlapping area represents the amount of risk that can be diversified away by holding Opus Small Cap and OVS SpA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on OVS SpA and Opus Small 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 Opus Small Cap are associated (or correlated) with OVS SpA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of OVS SpA has no effect on the direction of Opus Small i.e., Opus Small and OVS SpA go up and down completely randomly.

Pair Corralation between Opus Small and OVS SpA

Given the investment horizon of 90 days Opus Small is expected to generate 1.21 times less return on investment than OVS SpA. But when comparing it to its historical volatility, Opus Small Cap is 1.34 times less risky than OVS SpA. It trades about 0.06 of its potential returns per unit of risk. OVS SpA is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest  3,047  in OVS SpA on October 9, 2024 and sell it today you would earn a total of  479.00  from holding OVS SpA or generate 15.72% return on investment over 90 days.

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

Opus Small Cap  vs.  OVS SpA

Opus Small Cap

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Opus Small Cap has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable fundamental indicators, Opus Small is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

OVS SpA

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days OVS SpA has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, OVS SpA is not utilizing all of its potentials. The latest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Opus Small and OVS SpA

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

The idea behind Opus Small Cap and OVS SpA 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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.