Correlation Between Optiva and Evertec

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

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

Diversification Opportunities for Optiva and Evertec

0.57

Correlation Coefficient

Optiva  Evertec

Very weak diversification

The 3 months correlation between Optiva and Evertec is 0.57. Overlapping area represents the amount of risk that can be diversified away by holding Optiva Inc and Evertec in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Evertec 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 Evertec. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Evertec has no effect on the direction of Optiva i.e., Optiva and Evertec go up and down completely randomly.

Pair Corralation between Optiva and Evertec

Assuming the 90 days horizon Optiva Inc is expected to generate 5.63 times more return on investment than Evertec. However, Optiva is 5.63 times more volatile than Evertec. It trades about 0.03 of its potential returns per unit of risk. Evertec is currently generating about -0.08 per unit of risk. If you would invest  472.00  in Optiva Inc on March 7, 2024 and sell it today you would lose (26.00) from holding Optiva Inc or give up 5.51% of portfolio value over 90 days.

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

Optiva Inc  vs.  Evertec

Optiva Inc

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Optiva Inc are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite nearly unsteady technical and fundamental indicators, Optiva reported solid returns over the last few months and may actually be approaching a breakup point.

Evertec

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Evertec has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest inconsistent performance, the Stock's basic indicators remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for the firm shareholders.

Pair Trading with Optiva and Evertec

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

The idea behind Optiva Inc and Evertec 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 CEOs Directory module to screen CEOs from public companies around the world.