Correlation Between Oculus VisionTech and Fairfax Fin

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

By analyzing existing cross correlation between Oculus VisionTech and Fairfax Fin Hld, you can compare the effects of market volatilities on Oculus VisionTech and Fairfax Fin 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 Oculus VisionTech with a short position of Fairfax Fin. Check out your portfolio center. Please also check ongoing floating volatility patterns of Oculus VisionTech and Fairfax Fin.

Diversification Opportunities for Oculus VisionTech and Fairfax Fin

0.73

Correlation Coefficient

Oculus VisionTech  Fairfax Fin

Poor diversification

The 3 months correlation between Oculus and Fairfax is 0.73. Overlapping area represents the amount of risk that can be diversified away by holding Oculus VisionTech and Fairfax Fin Hld in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fairfax Fin Hld and Oculus VisionTech 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 Oculus VisionTech are associated (or correlated) with Fairfax Fin. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fairfax Fin Hld has no effect on the direction of Oculus VisionTech i.e., Oculus VisionTech and Fairfax Fin go up and down completely randomly.

Pair Corralation between Oculus VisionTech and Fairfax Fin

Assuming the 90 days horizon Oculus VisionTech is expected to generate 4.01 times more return on investment than Fairfax Fin. However, Oculus VisionTech is 4.01 times more volatile than Fairfax Fin Hld. It trades about 0.06 of its potential returns per unit of risk. Fairfax Fin Hld is currently generating about 0.16 per unit of risk. If you would invest  6.50  in Oculus VisionTech on September 19, 2024 and sell it today you would earn a total of  1.50  from holding Oculus VisionTech or generate 23.08% return on investment over 90 days.

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

Oculus VisionTech  vs.  Fairfax Fin Hld

Oculus VisionTech

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Oculus VisionTech are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of fairly unfluctuating basic indicators, Oculus VisionTech showed solid returns over the last few months and may actually be approaching a breakup point.

Fairfax Fin Hld

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Fairfax Fin Hld are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. Despite somewhat abnormal technical indicators, Fairfax Fin sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Oculus VisionTech and Fairfax Fin

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

The idea behind Oculus VisionTech and Fairfax Fin Hld 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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.