Correlation Between Open Network and OLT

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

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

Diversification Opportunities for Open Network and OLT

-0.58

Correlation Coefficient

Open Network  OLT

Excellent diversification

The 3 months correlation between Open and OLT is -0.58. Overlapping area represents the amount of risk that can be diversified away by holding The Open Network and OLT in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on OLT and Open Network 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 The Open Network are associated (or correlated) with OLT. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of OLT has no effect on the direction of Open Network i.e., Open Network and OLT go up and down completely randomly.

Pair Corralation between Open Network and OLT

Assuming the 90 days trading horizon The Open Network is expected to generate 0.53 times more return on investment than OLT. However, The Open Network is 1.87 times less risky than OLT. It trades about 0.17 of its potential returns per unit of risk. OLT is currently generating about 0.02 per unit of risk. If you would invest  236.00  in The Open Network on February 15, 2024 and sell it today you would earn a total of  452.00  from holding The Open Network or generate 191.53% return on investment over 90 days.

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

The Open Network  vs.  OLT

Open Network

Risk-Adjusted Performance

21 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in The Open Network are ranked lower than 21 (%) of all global equities and portfolios over the last 90 days. In spite of very unsteady basic indicators, Open Network displayed solid returns over the last few months and may actually be approaching a breakup point.

OLT

Risk-Adjusted Performance

0 of 100

Weak

Over the last 90 days OLT has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather unsteady basic indicators, OLT may actually be approaching a critical reversion point that can send shares even higher in June 2024.

Pair Trading with Open Network and OLT

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

The idea behind The Open Network and OLT 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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.