Correlation Between Highwood Asset and Oculus VisionTech

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

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

Diversification Opportunities for Highwood Asset and Oculus VisionTech

0.39

Correlation Coefficient

Highwood Asset  Oculus VisionTech

Weak diversification

The 3 months correlation between Highwood and Oculus is 0.39. Overlapping area represents the amount of risk that can be diversified away by holding Highwood Asset Management and Oculus VisionTech in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Oculus VisionTech and Highwood Asset 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 Highwood Asset Management are associated (or correlated) with Oculus VisionTech. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Oculus VisionTech has no effect on the direction of Highwood Asset i.e., Highwood Asset and Oculus VisionTech go up and down completely randomly.

Pair Corralation between Highwood Asset and Oculus VisionTech

Assuming the 90 days horizon Highwood Asset is expected to generate 3.09 times less return on investment than Oculus VisionTech. But when comparing it to its historical volatility, Highwood Asset Management is 1.73 times less risky than Oculus VisionTech. It trades about 0.05 of its potential returns per unit of risk. Oculus VisionTech is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest  6.00  in Oculus VisionTech on September 12, 2024 and sell it today you would earn a total of  1.00  from holding Oculus VisionTech or generate 16.67% return on investment over 90 days.

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

Highwood Asset Management  vs.  Oculus VisionTech

Highwood Asset Management

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Highwood Asset Management are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of fairly stable basic indicators, Highwood Asset is not utilizing all of its potentials. The recent stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Oculus VisionTech

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Oculus VisionTech are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of fairly unsteady basic indicators, Oculus VisionTech showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Highwood Asset and Oculus VisionTech

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

The idea behind Highwood Asset Management and Oculus VisionTech 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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.