Correlation Between Optivision Technology and Gold Circuit

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

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

Diversification Opportunities for Optivision Technology and Gold Circuit

0.67

Correlation Coefficient

Optivision Technology  Gold Circuit

Poor diversification

The 3 months correlation between Optivision and Gold is 0.67. Overlapping area represents the amount of risk that can be diversified away by holding Optivision Technology and Gold Circuit Electronics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gold Circuit Electronics and Optivision Technology 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 Optivision Technology are associated (or correlated) with Gold Circuit. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Gold Circuit Electronics has no effect on the direction of Optivision Technology i.e., Optivision Technology and Gold Circuit go up and down completely randomly.

Pair Corralation between Optivision Technology and Gold Circuit

Assuming the 90 days trading horizon Optivision Technology is expected to under-perform the Gold Circuit. In addition to that, Optivision Technology is 1.12 times more volatile than Gold Circuit Electronics. It trades about -0.07 of its total potential returns per unit of risk. Gold Circuit Electronics is currently generating about -0.07 per unit of volatility. If you would invest  20,900  in Gold Circuit Electronics on September 1, 2024 and sell it today you would lose (2,350) from holding Gold Circuit Electronics or give up 11.24% of portfolio value over 90 days.

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

Optivision Technology  vs.  Gold Circuit Electronics

Optivision Technology

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Optivision Technology has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest abnormal performance, the Stock's basic indicators remain stable and the latest fuss on Wall Street may also be a sign of long-term gains for the venture sophisticated investors.

Gold Circuit Electronics

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Gold Circuit Electronics has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest abnormal performance, the Stock's basic indicators remain stable and the latest fuss on Wall Street may also be a sign of long-term gains for the venture sophisticated investors.

Pair Trading with Optivision Technology and Gold Circuit

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

The idea behind Optivision Technology and Gold Circuit Electronics 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 Portfolio Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.