Correlation Between Ocumetics Technology and Sage Potash

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

Diversification Opportunities for Ocumetics Technology and Sage Potash

-0.02

Correlation Coefficient

Ocumetics Technology  Sage Potash

Good diversification

The 3 months correlation between Ocumetics and Sage is -0.02. Overlapping area represents the amount of risk that can be diversified away by holding Ocumetics Technology Corp and Sage Potash Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sage Potash Corp 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 Sage Potash. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sage Potash Corp has no effect on the direction of Ocumetics Technology i.e., Ocumetics Technology and Sage Potash go up and down completely randomly.

Pair Corralation between Ocumetics Technology and Sage Potash

Assuming the 90 days horizon Ocumetics Technology Corp is expected to under-perform the Sage Potash. But the stock apears to be less risky and, when comparing its historical volatility, Ocumetics Technology Corp is 1.66 times less risky than Sage Potash. The stock trades about -0.06 of its potential returns per unit of risk. The Sage Potash Corp is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest  19.00  in Sage Potash Corp on September 15, 2024 and sell it today you would earn a total of  1.00  from holding Sage Potash Corp or generate 5.26% return on investment over 90 days.

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

Ocumetics Technology Corp  vs.  Sage Potash Corp

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 recent stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Sage Potash Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Sage Potash Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest abnormal performance, the Stock's technical and fundamental indicators remain stable and the latest fuss on Wall Street may also be a sign of long-term gains for the venture sophisticated investors.

Pair Trading with Ocumetics Technology and Sage Potash

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

The idea behind Ocumetics Technology Corp and Sage Potash 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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.