Correlation Between Ocumetics Technology and Slam Exploration

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

Diversification Opportunities for Ocumetics Technology and Slam Exploration

-0.02

Correlation Coefficient

Ocumetics Technology  Slam Exploration

Good diversification

The 3 months correlation between Ocumetics and Slam is -0.02. Overlapping area represents the amount of risk that can be diversified away by holding Ocumetics Technology Corp and Slam Exploration in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Slam Exploration 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 Slam Exploration. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Slam Exploration has no effect on the direction of Ocumetics Technology i.e., Ocumetics Technology and Slam Exploration go up and down completely randomly.

Pair Corralation between Ocumetics Technology and Slam Exploration

Assuming the 90 days horizon Ocumetics Technology is expected to generate 2.15 times less return on investment than Slam Exploration. But when comparing it to its historical volatility, Ocumetics Technology Corp is 3.65 times less risky than Slam Exploration. It trades about 0.04 of its potential returns per unit of risk. Slam Exploration is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest  4.00  in Slam Exploration on September 23, 2024 and sell it today you would lose (1.00) from holding Slam Exploration or give up 25.0% of portfolio value over 90 days.

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

Ocumetics Technology Corp  vs.  Slam Exploration

Ocumetics Technology Corp

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Ocumetics Technology Corp are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Ocumetics Technology may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Slam Exploration

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Slam Exploration are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of fairly unfluctuating basic indicators, Slam Exploration showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Ocumetics Technology and Slam Exploration

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

The idea behind Ocumetics Technology Corp and Slam Exploration 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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.