Correlation Between Oculus VisionTech and Fairfax Financial

Can any of the company-specific risk be diversified away by investing in both Oculus VisionTech and Fairfax Financial 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 Financial 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 Financial Holdings, you can compare the effects of market volatilities on Oculus VisionTech and Fairfax Financial 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 Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Oculus VisionTech and Fairfax Financial.

Diversification Opportunities for Oculus VisionTech and Fairfax Financial

0.72

Correlation Coefficient

Oculus VisionTech  Fairfax Financial

Poor diversification

The 3 months correlation between Oculus and Fairfax is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding Oculus VisionTech and Fairfax Financial Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fairfax Financial 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 Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fairfax Financial has no effect on the direction of Oculus VisionTech i.e., Oculus VisionTech and Fairfax Financial go up and down completely randomly.

Pair Corralation between Oculus VisionTech and Fairfax Financial

Assuming the 90 days horizon Oculus VisionTech is expected to generate 8.12 times more return on investment than Fairfax Financial. However, Oculus VisionTech is 8.12 times more volatile than Fairfax Financial Holdings. It trades about 0.02 of its potential returns per unit of risk. Fairfax Financial Holdings is currently generating about 0.09 per unit of risk. If you would invest  16.00  in Oculus VisionTech on October 4, 2024 and sell it today you would lose (9.00) from holding Oculus VisionTech or give up 56.25% of portfolio value over 90 days.

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

Oculus VisionTech  vs.  Fairfax Financial Holdings

Oculus VisionTech

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Oculus VisionTech are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Oculus VisionTech showed solid returns over the last few months and may actually be approaching a breakup point.

Fairfax Financial

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Fairfax Financial Holdings are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. Despite somewhat abnormal technical indicators, Fairfax Financial sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Oculus VisionTech and Fairfax Financial

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

The idea behind Oculus VisionTech and Fairfax Financial Holdings 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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.