Correlation Between VHAI and Optec International

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

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

Diversification Opportunities for VHAI and Optec International

0.0

Correlation Coefficient

VHAI  Optec International

Pay attention - limited upside

The 3 months correlation between VHAI and Optec is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding VHAI and Optec International in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Optec International and VHAI 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 VHAI are associated (or correlated) with Optec International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Optec International has no effect on the direction of VHAI i.e., VHAI and Optec International go up and down completely randomly.

Pair Corralation between VHAI and Optec International

If you would invest (100.00) in Optec International on December 26, 2024 and sell it today you would earn a total of  100.00  from holding Optec International or generate -100.0% return on investment over 90 days.

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

VHAI  vs.  Optec International

VHAI

Risk-Adjusted Performance

Very Weak

Over the last 90 days VHAI has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fairly strong basic indicators, VHAI is not utilizing all of its potentials. The current stock price confusion, may contribute to short-horizon losses for the traders.

Optec International

Risk-Adjusted Performance

Very Weak

Over the last 90 days Optec International has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fairly strong basic indicators, Optec International is not utilizing all of its potentials. The latest stock price confusion, may contribute to short-horizon losses for the traders.

Pair Trading with VHAI and Optec International

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

The idea behind VHAI and Optec International 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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.