Correlation Between Optronics Technologies and Sidma SA

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

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

Diversification Opportunities for Optronics Technologies and Sidma SA

-0.33

Correlation Coefficient

Optronics Technologies  Sidma SA

Very good diversification

The 3 months correlation between Optronics and Sidma is -0.33. Overlapping area represents the amount of risk that can be diversified away by holding Optronics Technologies SA and Sidma SA Steel in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sidma SA Steel and Optronics Technologies 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 Optronics Technologies SA are associated (or correlated) with Sidma SA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sidma SA Steel has no effect on the direction of Optronics Technologies i.e., Optronics Technologies and Sidma SA go up and down completely randomly.

Pair Corralation between Optronics Technologies and Sidma SA

Assuming the 90 days trading horizon Optronics Technologies SA is expected to generate 2.19 times more return on investment than Sidma SA. However, Optronics Technologies is 2.19 times more volatile than Sidma SA Steel. It trades about 0.36 of its potential returns per unit of risk. Sidma SA Steel is currently generating about 0.05 per unit of risk. If you would invest  138.00  in Optronics Technologies SA on April 24, 2025 and sell it today you would earn a total of  162.00  from holding Optronics Technologies SA or generate 117.39% return on investment over 90 days.

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

Optronics Technologies SA  vs.  Sidma SA Steel

Optronics Technologies

Risk-Adjusted Performance

Strong

Compared to the overall equity markets, risk-adjusted returns on investments in Optronics Technologies SA are ranked lower than 28 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Optronics Technologies sustained solid returns over the last few months and may actually be approaching a breakup point.

Sidma SA Steel

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Sidma SA Steel are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, Sidma SA is not utilizing all of its potentials. The newest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Optronics Technologies and Sidma SA

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

The idea behind Optronics Technologies SA and Sidma SA Steel 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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..