Correlation Between Ocumetics Technology and NVIDIA CDR

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

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

Diversification Opportunities for Ocumetics Technology and NVIDIA CDR

0.04

Correlation Coefficient

Ocumetics Technology  NVIDIA CDR

Significant diversification

The 3 months correlation between Ocumetics and NVIDIA is 0.04. Overlapping area represents the amount of risk that can be diversified away by holding Ocumetics Technology Corp and NVIDIA CDR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NVIDIA CDR and Ocumetics Technology 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 Ocumetics Technology Corp are associated (or correlated) with NVIDIA CDR. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NVIDIA CDR has no effect on the direction of Ocumetics Technology i.e., Ocumetics Technology and NVIDIA CDR go up and down completely randomly.

Pair Corralation between Ocumetics Technology and NVIDIA CDR

Assuming the 90 days horizon Ocumetics Technology Corp is expected to generate 3.35 times more return on investment than NVIDIA CDR. However, Ocumetics Technology is 3.35 times more volatile than NVIDIA CDR. It trades about 0.12 of its potential returns per unit of risk. NVIDIA CDR is currently generating about 0.05 per unit of risk. If you would invest  33.00  in Ocumetics Technology Corp on October 21, 2024 and sell it today you would earn a total of  5.00  from holding Ocumetics Technology Corp or generate 15.15% return on investment over 90 days.

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

Ocumetics Technology Corp  vs.  NVIDIA CDR

Ocumetics Technology Corp

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Ocumetics Technology Corp are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak basic indicators, Ocumetics Technology showed solid returns over the last few months and may actually be approaching a breakup point.

NVIDIA CDR

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days NVIDIA CDR has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound technical and fundamental indicators, NVIDIA CDR is not utilizing all of its potentials. The recent stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Ocumetics Technology and NVIDIA CDR

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

The idea behind Ocumetics Technology Corp and NVIDIA CDR 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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.