Correlation Between Tavistock Investments and Optima Health

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

By analyzing existing cross correlation between Tavistock Investments Plc and Optima Health plc, you can compare the effects of market volatilities on Tavistock Investments and Optima Health 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 Tavistock Investments with a short position of Optima Health. Check out your portfolio center. Please also check ongoing floating volatility patterns of Tavistock Investments and Optima Health.

Diversification Opportunities for Tavistock Investments and Optima Health

-0.74

Correlation Coefficient

Tavistock Investments  Optima Health

Pay attention - limited upside

The 3 months correlation between Tavistock and Optima is -0.74. Overlapping area represents the amount of risk that can be diversified away by holding Tavistock Investments Plc and Optima Health plc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Optima Health plc and Tavistock Investments 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 Tavistock Investments Plc are associated (or correlated) with Optima Health. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Optima Health plc has no effect on the direction of Tavistock Investments i.e., Tavistock Investments and Optima Health go up and down completely randomly.

Pair Corralation between Tavistock Investments and Optima Health

Assuming the 90 days trading horizon Tavistock Investments Plc is expected to under-perform the Optima Health. In addition to that, Tavistock Investments is 3.37 times more volatile than Optima Health plc. It trades about -0.02 of its total potential returns per unit of risk. Optima Health plc is currently generating about -0.04 per unit of volatility. If you would invest  15,100  in Optima Health plc on October 24, 2024 and sell it today you would lose (650.00) from holding Optima Health plc or give up 4.3% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	16.3%
Values	Daily Returns

Tavistock Investments Plc  vs.  Optima Health plc

Tavistock Investments Plc

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Tavistock Investments Plc are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unsteady basic indicators, Tavistock Investments may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Optima Health plc

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Optima Health plc has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unsteady performance, the Stock's technical and fundamental indicators remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for the firm shareholders.

Pair Trading with Tavistock Investments and Optima Health

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

The idea behind Tavistock Investments Plc and Optima Health plc 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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.