Correlation Between Optec International and Marketing Worldwide

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

By analyzing existing cross correlation between Optec International and Marketing Worldwide, you can compare the effects of market volatilities on Optec International and Marketing Worldwide 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 Optec International with a short position of Marketing Worldwide. Check out your portfolio center. Please also check ongoing floating volatility patterns of Optec International and Marketing Worldwide.

Diversification Opportunities for Optec International and Marketing Worldwide

0.37

Correlation Coefficient

Optec International  Marketing Worldwide

Weak diversification

The 3 months correlation between Optec and Marketing is 0.37. Overlapping area represents the amount of risk that can be diversified away by holding Optec International and Marketing Worldwide in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Marketing Worldwide and Optec International 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 Optec International are associated (or correlated) with Marketing Worldwide. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Marketing Worldwide has no effect on the direction of Optec International i.e., Optec International and Marketing Worldwide go up and down completely randomly.

Pair Corralation between Optec International and Marketing Worldwide

If you would invest  0.02  in Marketing Worldwide on September 5, 2024 and sell it today you would earn a total of  0.00  from holding Marketing Worldwide or generate 0.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	4.76%
Values	Daily Returns

Optec International  vs.  Marketing Worldwide

Optec International

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Optec International has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fairly strong basic indicators, Optec International is not utilizing all of its potentials. The latest stock price confusion, may contribute to short-horizon losses for the traders.

Marketing Worldwide

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Marketing Worldwide are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of rather inconsistent basic indicators, Marketing Worldwide exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Optec International and Marketing Worldwide

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

The idea behind Optec International and Marketing Worldwide 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.