Correlation Between Trelleborg and OptiCept Technologies

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

By analyzing existing cross correlation between Trelleborg AB and OptiCept Technologies AB, you can compare the effects of market volatilities on Trelleborg and OptiCept Technologies 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 Trelleborg with a short position of OptiCept Technologies. Check out your portfolio center. Please also check ongoing floating volatility patterns of Trelleborg and OptiCept Technologies.

Diversification Opportunities for Trelleborg and OptiCept Technologies

0.22

Correlation Coefficient

Trelleborg  OptiCept Technologies

Modest diversification

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

Pair Corralation between Trelleborg and OptiCept Technologies

Assuming the 90 days trading horizon Trelleborg AB is expected to generate 0.22 times more return on investment than OptiCept Technologies. However, Trelleborg AB is 4.48 times less risky than OptiCept Technologies. It trades about 0.08 of its potential returns per unit of risk. OptiCept Technologies AB is currently generating about -0.03 per unit of risk. If you would invest  23,822  in Trelleborg AB on March 22, 2024 and sell it today you would earn a total of  17,238  from holding Trelleborg AB or generate 72.36% return on investment over 90 days.

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

Trelleborg AB  vs.  OptiCept Technologies AB

Trelleborg AB

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Trelleborg AB are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, Trelleborg is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

OptiCept Technologies

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in OptiCept Technologies AB are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak basic indicators, OptiCept Technologies unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Trelleborg and OptiCept Technologies

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

The idea behind Trelleborg AB and OptiCept Technologies AB 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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.