Correlation Between Trastor Real and Optima Bank

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

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

Diversification Opportunities for Trastor Real and Optima Bank

0.7

Correlation Coefficient

Trastor Real  Optima Bank

Poor diversification

The 3 months correlation between Trastor and Optima is 0.7. Overlapping area represents the amount of risk that can be diversified away by holding Trastor Real Estate 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 Trastor Real 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 Trastor Real Estate 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 Trastor Real i.e., Trastor Real and Optima Bank go up and down completely randomly.

Pair Corralation between Trastor Real and Optima Bank

Assuming the 90 days trading horizon Trastor Real Estate is expected to generate 1.73 times more return on investment than Optima Bank. However, Trastor Real is 1.73 times more volatile than Optima bank SA. It trades about 0.18 of its potential returns per unit of risk. Optima bank SA is currently generating about 0.21 per unit of risk. If you would invest  106.00  in Trastor Real Estate on December 3, 2024 and sell it today you would earn a total of  23.00  from holding Trastor Real Estate or generate 21.7% return on investment over 90 days.

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

Trastor Real Estate  vs.  Optima bank SA

Trastor Real Estate

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Trastor Real Estate are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. Even with relatively uncertain basic indicators, Trastor Real reported solid returns over the last few months and may actually be approaching a breakup point.

Optima bank SA

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Optima bank SA are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. Despite somewhat uncertain basic indicators, Optima Bank sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Trastor Real and Optima Bank

The main advantage of trading using opposite Trastor Real and Optima Bank positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Trastor Real 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 Trastor Real Estate 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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.