Correlation Between Optima Prima and Inocycle Technology

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

By analyzing existing cross correlation between Optima Prima Metal and Inocycle Technology Tbk, you can compare the effects of market volatilities on Optima Prima and Inocycle 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 Optima Prima with a short position of Inocycle Technology. Check out your portfolio center. Please also check ongoing floating volatility patterns of Optima Prima and Inocycle Technology.

Diversification Opportunities for Optima Prima and Inocycle Technology

-0.63

Correlation Coefficient

Optima Prima  Inocycle Technology

Excellent diversification

The 3 months correlation between Optima and Inocycle is -0.63. Overlapping area represents the amount of risk that can be diversified away by holding Optima Prima Metal and Inocycle Technology Tbk in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Inocycle Technology Tbk and Optima Prima 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 Optima Prima Metal are associated (or correlated) with Inocycle Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Inocycle Technology Tbk has no effect on the direction of Optima Prima i.e., Optima Prima and Inocycle Technology go up and down completely randomly.

Pair Corralation between Optima Prima and Inocycle Technology

Assuming the 90 days trading horizon Optima Prima Metal is expected to under-perform the Inocycle Technology. In addition to that, Optima Prima is 1.27 times more volatile than Inocycle Technology Tbk. It trades about -0.35 of its total potential returns per unit of risk. Inocycle Technology Tbk is currently generating about 0.04 per unit of volatility. If you would invest  9,200  in Inocycle Technology Tbk on September 19, 2024 and sell it today you would earn a total of  500.00  from holding Inocycle Technology Tbk or generate 5.43% return on investment over 90 days.

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

Optima Prima Metal  vs.  Inocycle Technology Tbk

Optima Prima Metal

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Optima Prima Metal has generated negative risk-adjusted returns adding no value to investors with long positions. Despite conflicting performance in the last few months, the Stock's forward-looking signals remain quite persistent which may send shares a bit higher in January 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Inocycle Technology Tbk

Risk-Adjusted Performance

3 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Inocycle Technology Tbk are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting forward-looking signals, Inocycle Technology may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Optima Prima and Inocycle Technology

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

The idea behind Optima Prima Metal and Inocycle Technology Tbk 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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.