Correlation Between Optronics Technologies and Lavipharm

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

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

Diversification Opportunities for Optronics Technologies and Lavipharm

-0.15

Correlation Coefficient

Optronics Technologies  Lavipharm

Good diversification

The 3 months correlation between Optronics and Lavipharm is -0.15. Overlapping area represents the amount of risk that can be diversified away by holding Optronics Technologies SA and Lavipharm SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lavipharm SA and Optronics Technologies 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 Optronics Technologies SA are associated (or correlated) with Lavipharm. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lavipharm SA has no effect on the direction of Optronics Technologies i.e., Optronics Technologies and Lavipharm go up and down completely randomly.

Pair Corralation between Optronics Technologies and Lavipharm

Assuming the 90 days trading horizon Optronics Technologies SA is expected to generate 0.06 times more return on investment than Lavipharm. However, Optronics Technologies SA is 15.59 times less risky than Lavipharm. It trades about 0.0 of its potential returns per unit of risk. Lavipharm SA is currently generating about -0.04 per unit of risk. If you would invest  148.00  in Optronics Technologies SA on September 12, 2024 and sell it today you would earn a total of  0.00  from holding Optronics Technologies SA or generate 0.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.44%
Values	Daily Returns

Optronics Technologies SA  vs.  Lavipharm SA

Optronics Technologies

Risk-Adjusted Performance

0 of 100

Very Weak

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

Lavipharm SA

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Lavipharm SA has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Lavipharm is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Optronics Technologies and Lavipharm

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

The idea behind Optronics Technologies SA and Lavipharm SA 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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.