Correlation Between East Side and Ocumetics Technology

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

By analyzing existing cross correlation between East Side Games and Ocumetics Technology Corp, you can compare the effects of market volatilities on East Side and Ocumetics Technology 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 East Side with a short position of Ocumetics Technology. Check out your portfolio center. Please also check ongoing floating volatility patterns of East Side and Ocumetics Technology.

Diversification Opportunities for East Side and Ocumetics Technology

0.23

Correlation Coefficient

East Side  Ocumetics Technology

Modest diversification

The 3 months correlation between East and Ocumetics is 0.23. Overlapping area represents the amount of risk that can be diversified away by holding East Side Games and Ocumetics Technology Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ocumetics Technology Corp and East Side 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 East Side Games are associated (or correlated) with Ocumetics Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ocumetics Technology Corp has no effect on the direction of East Side i.e., East Side and Ocumetics Technology go up and down completely randomly.

Pair Corralation between East Side and Ocumetics Technology

Assuming the 90 days trading horizon East Side Games is expected to under-perform the Ocumetics Technology. In addition to that, East Side is 1.32 times more volatile than Ocumetics Technology Corp. It trades about -0.06 of its total potential returns per unit of risk. Ocumetics Technology Corp is currently generating about -0.05 per unit of volatility. If you would invest  34.00  in Ocumetics Technology Corp on September 13, 2024 and sell it today you would lose (3.00) from holding Ocumetics Technology Corp or give up 8.82% of portfolio value over 90 days.

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

East Side Games  vs.  Ocumetics Technology Corp

East Side Games

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days East Side Games 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 healthy and the recent disarray on Wall Street may also be a sign of long period gains for the firm investors.

Ocumetics Technology Corp

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Ocumetics Technology Corp are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of fairly stable basic indicators, Ocumetics Technology is not utilizing all of its potentials. The current stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Pair Trading with East Side and Ocumetics Technology

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

The idea behind East Side Games and Ocumetics Technology 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.

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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.