Correlation Between Ocumetics Technology and Happy Creek

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

By analyzing existing cross correlation between Ocumetics Technology Corp and Happy Creek Minerals, you can compare the effects of market volatilities on Ocumetics Technology and Happy Creek 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 Ocumetics Technology with a short position of Happy Creek. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ocumetics Technology and Happy Creek.

Diversification Opportunities for Ocumetics Technology and Happy Creek

-0.22

Correlation Coefficient

Ocumetics Technology  Happy Creek

Very good diversification

The 3 months correlation between Ocumetics and Happy is -0.22. Overlapping area represents the amount of risk that can be diversified away by holding Ocumetics Technology Corp and Happy Creek Minerals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Happy Creek Minerals and Ocumetics Technology 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 Ocumetics Technology Corp are associated (or correlated) with Happy Creek. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Happy Creek Minerals has no effect on the direction of Ocumetics Technology i.e., Ocumetics Technology and Happy Creek go up and down completely randomly.

Pair Corralation between Ocumetics Technology and Happy Creek

Assuming the 90 days horizon Ocumetics Technology Corp is expected to under-perform the Happy Creek. But the stock apears to be less risky and, when comparing its historical volatility, Ocumetics Technology Corp is 2.78 times less risky than Happy Creek. The stock trades about -0.02 of its potential returns per unit of risk. The Happy Creek Minerals is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest  6.00  in Happy Creek Minerals on September 26, 2024 and sell it today you would earn a total of  1.00  from holding Happy Creek Minerals or generate 16.67% return on investment over 90 days.

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

Ocumetics Technology Corp  vs.  Happy Creek Minerals

Ocumetics Technology Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Ocumetics Technology Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable basic indicators, Ocumetics Technology is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Happy Creek Minerals

Risk-Adjusted Performance

5 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Happy Creek Minerals are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Happy Creek showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Ocumetics Technology and Happy Creek

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

The idea behind Ocumetics Technology Corp and Happy Creek Minerals 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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.