Correlation Between Optronics Technologies and Mermeren Kombinat

Can any of the company-specific risk be diversified away by investing in both Optronics Technologies and Mermeren Kombinat 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 Mermeren Kombinat 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 Mermeren Kombinat AD, you can compare the effects of market volatilities on Optronics Technologies and Mermeren Kombinat 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 Mermeren Kombinat. Check out your portfolio center. Please also check ongoing floating volatility patterns of Optronics Technologies and Mermeren Kombinat.

Diversification Opportunities for Optronics Technologies and Mermeren Kombinat

0.14

Correlation Coefficient

Optronics Technologies  Mermeren Kombinat

Average diversification

The 3 months correlation between Optronics and Mermeren is 0.14. Overlapping area represents the amount of risk that can be diversified away by holding Optronics Technologies SA and Mermeren Kombinat AD in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mermeren Kombinat 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 Mermeren Kombinat. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mermeren Kombinat has no effect on the direction of Optronics Technologies i.e., Optronics Technologies and Mermeren Kombinat go up and down completely randomly.

Pair Corralation between Optronics Technologies and Mermeren Kombinat

If you would invest  4,000  in Mermeren Kombinat AD on September 16, 2024 and sell it today you would earn a total of  0.00  from holding Mermeren Kombinat AD or generate 0.0% return on investment over 90 days.

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

Optronics Technologies SA  vs.  Mermeren Kombinat AD

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.

Mermeren Kombinat

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Mermeren Kombinat AD are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, Mermeren Kombinat is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Optronics Technologies and Mermeren Kombinat

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

The idea behind Optronics Technologies SA and Mermeren Kombinat AD 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 Money Managers module to screen money managers from public funds and ETFs managed around the world.