Correlation Between Optima Bank and Intracom Constructions

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

By analyzing existing cross correlation between Optima bank SA and Intracom Constructions Societe, you can compare the effects of market volatilities on Optima Bank and Intracom Constructions 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 Bank with a short position of Intracom Constructions. Check out your portfolio center. Please also check ongoing floating volatility patterns of Optima Bank and Intracom Constructions.

Diversification Opportunities for Optima Bank and Intracom Constructions

0.33

Correlation Coefficient

Optima Bank  Intracom Constructions

Weak diversification

The 3 months correlation between Optima and Intracom is 0.33. Overlapping area represents the amount of risk that can be diversified away by holding Optima bank SA and Intracom Constructions Societe in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Intracom Constructions and Optima Bank 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 bank SA are associated (or correlated) with Intracom Constructions. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Intracom Constructions has no effect on the direction of Optima Bank i.e., Optima Bank and Intracom Constructions go up and down completely randomly.

Pair Corralation between Optima Bank and Intracom Constructions

Assuming the 90 days trading horizon Optima bank SA is expected to under-perform the Intracom Constructions. But the stock apears to be less risky and, when comparing its historical volatility, Optima bank SA is 1.34 times less risky than Intracom Constructions. The stock trades about -0.07 of its potential returns per unit of risk. The Intracom Constructions Societe is currently generating about -0.04 of returns per unit of risk over similar time horizon. If you would invest  500.00  in Intracom Constructions Societe on September 5, 2024 and sell it today you would lose (20.00) from holding Intracom Constructions Societe or give up 4.0% of portfolio value over 90 days.

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

Optima bank SA  vs.  Intracom Constructions Societe

Optima bank SA

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Optima bank SA has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Optima Bank is not utilizing all of its potentials. The newest stock price disturbance, may contribute to short-term losses for the investors.

Intracom Constructions

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Intracom Constructions Societe has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Intracom Constructions is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Optima Bank and Intracom Constructions

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

The idea behind Optima bank SA and Intracom Constructions Societe 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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.