Correlation Between Mobilicom Limited and Optical Cable

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

By analyzing existing cross correlation between Mobilicom Limited Warrants and Optical Cable, you can compare the effects of market volatilities on Mobilicom Limited and Optical Cable 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 Mobilicom Limited with a short position of Optical Cable. Check out your portfolio center. Please also check ongoing floating volatility patterns of Mobilicom Limited and Optical Cable.

Diversification Opportunities for Mobilicom Limited and Optical Cable

-0.7

Correlation Coefficient

Mobilicom Limited  Optical Cable

Excellent diversification

The 3 months correlation between Mobilicom and Optical is -0.7. Overlapping area represents the amount of risk that can be diversified away by holding Mobilicom Limited Warrants and Optical Cable in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Optical Cable and Mobilicom Limited 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 Mobilicom Limited Warrants are associated (or correlated) with Optical Cable. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Optical Cable has no effect on the direction of Mobilicom Limited i.e., Mobilicom Limited and Optical Cable go up and down completely randomly.

Pair Corralation between Mobilicom Limited and Optical Cable

Assuming the 90 days horizon Mobilicom Limited Warrants is expected to generate 9.06 times more return on investment than Optical Cable. However, Mobilicom Limited is 9.06 times more volatile than Optical Cable. It trades about 0.17 of its potential returns per unit of risk. Optical Cable is currently generating about -0.12 per unit of risk. If you would invest  17.00  in Mobilicom Limited Warrants on September 17, 2024 and sell it today you would earn a total of  8.99  from holding Mobilicom Limited Warrants or generate 52.88% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	56.92%
Values	Daily Returns

Mobilicom Limited Warrants  vs.  Optical Cable

Mobilicom Limited

Risk-Adjusted Performance

12 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Mobilicom Limited Warrants are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of fairly uncertain fundamental drivers, Mobilicom Limited showed solid returns over the last few months and may actually be approaching a breakup point.

Optical Cable

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Optical Cable has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of inconsistent performance in the last few months, the Stock's fundamental indicators remain rather sound which may send shares a bit higher in January 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Pair Trading with Mobilicom Limited and Optical Cable

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

The idea behind Mobilicom Limited Warrants and Optical Cable 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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.