Correlation Between Archer Daniels and Optimi Health

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

By analyzing existing cross correlation between Archer Daniels Midland and Optimi Health Corp, you can compare the effects of market volatilities on Archer Daniels and Optimi 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 Archer Daniels with a short position of Optimi Health. Check out your portfolio center. Please also check ongoing floating volatility patterns of Archer Daniels and Optimi Health.

Diversification Opportunities for Archer Daniels and Optimi Health

0.72

Correlation Coefficient

Archer Daniels  Optimi Health

Poor diversification

The 3 months correlation between Archer and Optimi is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding Archer Daniels Midland and Optimi Health Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Optimi Health Corp and Archer Daniels 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 Archer Daniels Midland are associated (or correlated) with Optimi Health. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Optimi Health Corp has no effect on the direction of Archer Daniels i.e., Archer Daniels and Optimi Health go up and down completely randomly.

Pair Corralation between Archer Daniels and Optimi Health

Considering the 90-day investment horizon Archer Daniels Midland is expected to under-perform the Optimi Health. But the stock apears to be less risky and, when comparing its historical volatility, Archer Daniels Midland is 4.78 times less risky than Optimi Health. The stock trades about -0.13 of its potential returns per unit of risk. The Optimi Health Corp is currently generating about -0.02 of returns per unit of risk over similar time horizon. If you would invest  21.00  in Optimi Health Corp on September 17, 2024 and sell it today you would lose (5.00) from holding Optimi Health Corp or give up 23.81% of portfolio value over 90 days.

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

Archer Daniels Midland  vs.  Optimi Health Corp

Archer Daniels Midland

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Archer Daniels Midland has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest weak performance, the Stock's fundamental indicators remain healthy and the recent disarray on Wall Street may also be a sign of long period gains for the firm investors.

Optimi Health Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Optimi Health Corp has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's technical indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Pair Trading with Archer Daniels and Optimi Health

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

The idea behind Archer Daniels Midland and Optimi Health Corp 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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.