Correlation Between HopTo and Optex Systems

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

By analyzing existing cross correlation between hopTo Inc and Optex Systems Holdings,, you can compare the effects of market volatilities on HopTo and Optex Systems 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 HopTo with a short position of Optex Systems. Check out your portfolio center. Please also check ongoing floating volatility patterns of HopTo and Optex Systems.

Diversification Opportunities for HopTo and Optex Systems

0.09

Correlation Coefficient

HopTo  Optex Systems

Significant diversification

The 3 months correlation between HopTo and Optex is 0.09. Overlapping area represents the amount of risk that can be diversified away by holding hopTo Inc and Optex Systems Holdings, in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Optex Systems Holdings, and HopTo 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 hopTo Inc are associated (or correlated) with Optex Systems. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Optex Systems Holdings, has no effect on the direction of HopTo i.e., HopTo and Optex Systems go up and down completely randomly.

Pair Corralation between HopTo and Optex Systems

If you would invest  793.00  in Optex Systems Holdings, on September 2, 2024 and sell it today you would earn a total of  97.00  from holding Optex Systems Holdings, or generate 12.23% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	0.79%
Values	Daily Returns

hopTo Inc  vs.  Optex Systems Holdings,

hopTo Inc

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days hopTo Inc has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy basic indicators, HopTo is not utilizing all of its potentials. The latest stock price disarray, may contribute to short-term losses for the investors.

Optex Systems Holdings,

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Optex Systems Holdings, are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Optex Systems unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with HopTo and Optex Systems

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

The idea behind hopTo Inc and Optex Systems Holdings, 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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.