Correlation Between Troax Group and OptiCept Technologies

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

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

Diversification Opportunities for Troax Group and OptiCept Technologies

-0.4

Correlation Coefficient

Troax Group  OptiCept Technologies

Very good diversification

The 3 months correlation between Troax and OptiCept is -0.4. Overlapping area represents the amount of risk that can be diversified away by holding Troax Group AB and OptiCept Technologies AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on OptiCept Technologies and Troax Group 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 Troax Group AB are associated (or correlated) with OptiCept Technologies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of OptiCept Technologies has no effect on the direction of Troax Group i.e., Troax Group and OptiCept Technologies go up and down completely randomly.

Pair Corralation between Troax Group and OptiCept Technologies

Assuming the 90 days trading horizon Troax Group AB is expected to generate 0.45 times more return on investment than OptiCept Technologies. However, Troax Group AB is 2.2 times less risky than OptiCept Technologies. It trades about 0.06 of its potential returns per unit of risk. OptiCept Technologies AB is currently generating about -0.04 per unit of risk. If you would invest  21,500  in Troax Group AB on September 27, 2024 and sell it today you would earn a total of  1,300  from holding Troax Group AB or generate 6.05% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

Troax Group AB  vs.  OptiCept Technologies AB

Troax Group AB

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Troax Group AB are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Troax Group may actually be approaching a critical reversion point that can send shares even higher in January 2025.

OptiCept Technologies

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days OptiCept Technologies AB has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest uncertain performance, the Stock's basic indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Pair Trading with Troax Group and OptiCept Technologies

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

The idea behind Troax Group AB and OptiCept Technologies AB 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 Global Correlations module to find global opportunities by holding instruments from different markets.