Correlation Between POET Technologies and Oculus VisionTech

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

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

Diversification Opportunities for POET Technologies and Oculus VisionTech

0.64

Correlation Coefficient

POET Technologies  Oculus VisionTech

Poor diversification

The 3 months correlation between POET and Oculus is 0.64. Overlapping area represents the amount of risk that can be diversified away by holding POET Technologies and Oculus VisionTech in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Oculus VisionTech and POET Technologies 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 POET Technologies are associated (or correlated) with Oculus VisionTech. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Oculus VisionTech has no effect on the direction of POET Technologies i.e., POET Technologies and Oculus VisionTech go up and down completely randomly.

Pair Corralation between POET Technologies and Oculus VisionTech

Assuming the 90 days horizon POET Technologies is expected to generate 1.25 times more return on investment than Oculus VisionTech. However, POET Technologies is 1.25 times more volatile than Oculus VisionTech. It trades about 0.21 of its potential returns per unit of risk. Oculus VisionTech is currently generating about 0.09 per unit of risk. If you would invest  585.00  in POET Technologies on October 8, 2024 and sell it today you would earn a total of  389.00  from holding POET Technologies or generate 66.5% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	97.5%
Values	Daily Returns

POET Technologies  vs.  Oculus VisionTech

POET Technologies

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in POET Technologies are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of fairly fragile basic indicators, POET Technologies showed solid returns over the last few months and may actually be approaching a breakup point.

Oculus VisionTech

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Oculus VisionTech are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak basic indicators, Oculus VisionTech showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with POET Technologies and Oculus VisionTech

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

The idea behind POET Technologies and Oculus VisionTech 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.

Check out your portfolio center.

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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.