Correlation Between Optima Health and PureTech Health

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

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

Diversification Opportunities for Optima Health and PureTech Health

0.09

Correlation Coefficient

Optima Health  PureTech Health

Significant diversification

The 3 months correlation between Optima and PureTech is 0.09. Overlapping area represents the amount of risk that can be diversified away by holding Optima Health plc and PureTech Health plc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PureTech Health plc and Optima Health 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 Optima Health plc are associated (or correlated) with PureTech Health. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PureTech Health plc has no effect on the direction of Optima Health i.e., Optima Health and PureTech Health go up and down completely randomly.

Pair Corralation between Optima Health and PureTech Health

Assuming the 90 days trading horizon Optima Health plc is expected to generate 0.84 times more return on investment than PureTech Health. However, Optima Health plc is 1.19 times less risky than PureTech Health. It trades about 0.09 of its potential returns per unit of risk. PureTech Health plc is currently generating about 0.04 per unit of risk. If you would invest  17,800  in Optima Health plc on April 21, 2025 and sell it today you would earn a total of  1,650  from holding Optima Health plc or generate 9.27% return on investment over 90 days.

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

Optima Health plc  vs.  PureTech Health plc

Optima Health plc

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Optima Health plc are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of rather uncertain technical and fundamental indicators, Optima Health may actually be approaching a critical reversion point that can send shares even higher in August 2025.

PureTech Health plc

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in PureTech Health plc are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, PureTech Health is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Optima Health and PureTech Health

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

The idea behind Optima Health plc and PureTech Health plc 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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.