Correlation Between Thrace Plastics and Optima Bank

Can any of the company-specific risk be diversified away by investing in both Thrace Plastics and Optima Bank 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 Thrace Plastics and Optima Bank into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Thrace Plastics Holding and Optima bank SA, you can compare the effects of market volatilities on Thrace Plastics and Optima Bank 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 Thrace Plastics with a short position of Optima Bank. Check out your portfolio center. Please also check ongoing floating volatility patterns of Thrace Plastics and Optima Bank.

Diversification Opportunities for Thrace Plastics and Optima Bank

0.03

Correlation Coefficient

Thrace Plastics  Optima Bank

Significant diversification

The 3 months correlation between Thrace and Optima is 0.03. Overlapping area represents the amount of risk that can be diversified away by holding Thrace Plastics Holding and Optima bank SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Optima bank SA and Thrace Plastics 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 Thrace Plastics Holding are associated (or correlated) with Optima Bank. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Optima bank SA has no effect on the direction of Thrace Plastics i.e., Thrace Plastics and Optima Bank go up and down completely randomly.

Pair Corralation between Thrace Plastics and Optima Bank

Assuming the 90 days trading horizon Thrace Plastics Holding is expected to under-perform the Optima Bank. In addition to that, Thrace Plastics is 1.34 times more volatile than Optima bank SA. It trades about -0.01 of its total potential returns per unit of risk. Optima bank SA is currently generating about 0.2 per unit of volatility. If you would invest  1,264  in Optima bank SA on December 4, 2024 and sell it today you would earn a total of  170.00  from holding Optima bank SA or generate 13.45% return on investment over 90 days.

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

Thrace Plastics Holding  vs.  Optima bank SA

Thrace Plastics Holding

Risk-Adjusted Performance

Very Weak

Over the last 90 days Thrace Plastics Holding has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Thrace Plastics is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Optima bank SA

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Optima bank SA are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. Despite somewhat unfluctuating basic indicators, Optima Bank sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Thrace Plastics and Optima Bank

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

The idea behind Thrace Plastics Holding and Optima bank SA 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.