Correlation Between Add Value and Optimix Mix

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

By analyzing existing cross correlation between Add Value Fund and Optimix Mix Fund, you can compare the effects of market volatilities on Add Value and Optimix Mix 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 Add Value with a short position of Optimix Mix. Check out your portfolio center. Please also check ongoing floating volatility patterns of Add Value and Optimix Mix.

Diversification Opportunities for Add Value and Optimix Mix

0.96

Correlation Coefficient

Add Value  Optimix Mix

Almost no diversification

The 3 months correlation between Add and Optimix is 0.96. Overlapping area represents the amount of risk that can be diversified away by holding Add Value Fund and Optimix Mix Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Optimix Mix Fund and Add Value 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 Add Value Fund are associated (or correlated) with Optimix Mix. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Optimix Mix Fund has no effect on the direction of Add Value i.e., Add Value and Optimix Mix go up and down completely randomly.

Pair Corralation between Add Value and Optimix Mix

Assuming the 90 days trading horizon Add Value Fund is expected to generate 4.16 times more return on investment than Optimix Mix. However, Add Value is 4.16 times more volatile than Optimix Mix Fund. It trades about 0.24 of its potential returns per unit of risk. Optimix Mix Fund is currently generating about 0.35 per unit of risk. If you would invest  8,935  in Add Value Fund on April 23, 2025 and sell it today you would earn a total of  1,717  from holding Add Value Fund or generate 19.22% return on investment over 90 days.

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

Add Value Fund  vs.  Optimix Mix Fund

Add Value Fund

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Add Value Fund are ranked lower than 19 (%) of all funds and portfolios of funds over the last 90 days. Despite somewhat uncertain basic indicators, Add Value sustained solid returns over the last few months and may actually be approaching a breakup point.

Optimix Mix Fund

Risk-Adjusted Performance

Strong

Compared to the overall equity markets, risk-adjusted returns on investments in Optimix Mix Fund are ranked lower than 27 (%) of all funds and portfolios of funds over the last 90 days. Despite somewhat weak basic indicators, Optimix Mix may actually be approaching a critical reversion point that can send shares even higher in August 2025.

Pair Trading with Add Value and Optimix Mix

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

The idea behind Add Value Fund and Optimix Mix Fund 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 Portfolio Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.