Correlation Between Optiva and Dragon Capital

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

By analyzing existing cross correlation between Optiva Inc and Dragon Capital Grp, you can compare the effects of market volatilities on Optiva and Dragon Capital 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 Optiva with a short position of Dragon Capital. Check out your portfolio center. Please also check ongoing floating volatility patterns of Optiva and Dragon Capital.

Diversification Opportunities for Optiva and Dragon Capital

0.05

Correlation Coefficient

Optiva  Dragon Capital

Significant diversification

The 3 months correlation between Optiva and Dragon is 0.05. Overlapping area represents the amount of risk that can be diversified away by holding Optiva Inc and Dragon Capital Grp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dragon Capital Grp and Optiva 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 Optiva Inc are associated (or correlated) with Dragon Capital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dragon Capital Grp has no effect on the direction of Optiva i.e., Optiva and Dragon Capital go up and down completely randomly.

Pair Corralation between Optiva and Dragon Capital

Assuming the 90 days horizon Optiva Inc is expected to under-perform the Dragon Capital. But the pink sheet apears to be less risky and, when comparing its historical volatility, Optiva Inc is 6.36 times less risky than Dragon Capital. The pink sheet trades about -0.12 of its potential returns per unit of risk. The Dragon Capital Grp is currently generating about 0.16 of returns per unit of risk over similar time horizon. If you would invest  0.03  in Dragon Capital Grp on September 23, 2024 and sell it today you would earn a total of  0.00  from holding Dragon Capital Grp 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

Optiva Inc  vs.  Dragon Capital Grp

Optiva Inc

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Optiva Inc has generated negative risk-adjusted returns adding no value to investors with long positions. Despite inconsistent performance in the last few months, the Stock's technical and fundamental indicators remain nearly stable which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Dragon Capital Grp

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Dragon Capital Grp are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal technical and fundamental indicators, Dragon Capital showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Optiva and Dragon Capital

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

The idea behind Optiva Inc and Dragon Capital Grp 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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.