Correlation Between Transport International and OPERA SOFTWARE

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

By analyzing existing cross correlation between Transport International Holdings and OPERA SOFTWARE, you can compare the effects of market volatilities on Transport International and OPERA SOFTWARE 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 Transport International with a short position of OPERA SOFTWARE. Check out your portfolio center. Please also check ongoing floating volatility patterns of Transport International and OPERA SOFTWARE.

Diversification Opportunities for Transport International and OPERA SOFTWARE

0.32

Correlation Coefficient

Transport International  OPERA SOFTWARE

Weak diversification

The 3 months correlation between Transport and OPERA is 0.32. Overlapping area represents the amount of risk that can be diversified away by holding Transport International Holdin and OPERA SOFTWARE in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on OPERA SOFTWARE and Transport International 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 Transport International Holdings are associated (or correlated) with OPERA SOFTWARE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of OPERA SOFTWARE has no effect on the direction of Transport International i.e., Transport International and OPERA SOFTWARE go up and down completely randomly.

Pair Corralation between Transport International and OPERA SOFTWARE

Assuming the 90 days horizon Transport International is expected to generate 12.27 times less return on investment than OPERA SOFTWARE. But when comparing it to its historical volatility, Transport International Holdings is 1.12 times less risky than OPERA SOFTWARE. It trades about 0.0 of its potential returns per unit of risk. OPERA SOFTWARE is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest  82.00  in OPERA SOFTWARE on April 20, 2025 and sell it today you would earn a total of  30.00  from holding OPERA SOFTWARE or generate 36.59% return on investment over 90 days.

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

Transport International Holdin  vs.  OPERA SOFTWARE

Transport International

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Transport International Holdings are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Transport International reported solid returns over the last few months and may actually be approaching a breakup point.

OPERA SOFTWARE

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in OPERA SOFTWARE are ranked lower than 25 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively fragile basic indicators, OPERA SOFTWARE unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Transport International and OPERA SOFTWARE

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

The idea behind Transport International Holdings and OPERA SOFTWARE 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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .