Correlation Between Ocumetics Technology and Pentagon I

Can any of the company-specific risk be diversified away by investing in both Ocumetics Technology and Pentagon I 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 Pentagon I 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 Pentagon I Capital, you can compare the effects of market volatilities on Ocumetics Technology and Pentagon I 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 Pentagon I. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ocumetics Technology and Pentagon I.

Diversification Opportunities for Ocumetics Technology and Pentagon I

0.46

Correlation Coefficient

Ocumetics Technology  Pentagon I

Very weak diversification

The 3 months correlation between Ocumetics and Pentagon is 0.46. Overlapping area represents the amount of risk that can be diversified away by holding Ocumetics Technology Corp and Pentagon I Capital in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pentagon I Capital 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 Pentagon I. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pentagon I Capital has no effect on the direction of Ocumetics Technology i.e., Ocumetics Technology and Pentagon I go up and down completely randomly.

Pair Corralation between Ocumetics Technology and Pentagon I

Assuming the 90 days horizon Ocumetics Technology Corp is expected to generate 0.26 times more return on investment than Pentagon I. However, Ocumetics Technology Corp is 3.78 times less risky than Pentagon I. It trades about -0.13 of its potential returns per unit of risk. Pentagon I Capital is currently generating about -0.16 per unit of risk. If you would invest  34.00  in Ocumetics Technology Corp on September 26, 2024 and sell it today you would lose (4.00) from holding Ocumetics Technology Corp or give up 11.76% of portfolio value over 90 days.

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

Ocumetics Technology Corp  vs.  Pentagon I Capital

Ocumetics Technology Corp

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pentagon I Capital

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Pentagon I Capital has generated negative risk-adjusted returns adding no value to investors with long positions. Despite unfluctuating performance in the last few months, the Stock's basic indicators remain somewhat strong which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with Ocumetics Technology and Pentagon I

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

The idea behind Ocumetics Technology Corp and Pentagon I Capital 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 Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.