Correlation Between Financial and Olympia Financial

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

By analyzing existing cross correlation between Financial 15 Split and Olympia Financial Group, you can compare the effects of market volatilities on Financial and Olympia Financial 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 Financial with a short position of Olympia Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Financial and Olympia Financial.

Diversification Opportunities for Financial and Olympia Financial

0.74

Correlation Coefficient

Financial  Olympia Financial

Poor diversification

The 3 months correlation between Financial and Olympia is 0.74. Overlapping area represents the amount of risk that can be diversified away by holding Financial 15 Split and Olympia Financial Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Olympia Financial and Financial 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 Financial 15 Split are associated (or correlated) with Olympia Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Olympia Financial has no effect on the direction of Financial i.e., Financial and Olympia Financial go up and down completely randomly.

Pair Corralation between Financial and Olympia Financial

Assuming the 90 days trading horizon Financial is expected to generate 1.66 times less return on investment than Olympia Financial. But when comparing it to its historical volatility, Financial 15 Split is 4.71 times less risky than Olympia Financial. It trades about 0.29 of its potential returns per unit of risk. Olympia Financial Group is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest  9,828  in Olympia Financial Group on September 21, 2024 and sell it today you would earn a total of  772.00  from holding Olympia Financial Group or generate 7.86% return on investment over 90 days.

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

Financial 15 Split  vs.  Olympia Financial Group

Financial 15 Split

Risk-Adjusted Performance

22 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Financial 15 Split are ranked lower than 22 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, Financial is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.

Olympia Financial

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Olympia Financial Group are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating basic indicators, Olympia Financial may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Financial and Olympia Financial

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

The idea behind Financial 15 Split and Olympia Financial Group 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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.