Correlation Between PureTech Health and Optima Health

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

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

Diversification Opportunities for PureTech Health and Optima Health

0.09

Correlation Coefficient

PureTech Health  Optima Health

Significant diversification

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

Pair Corralation between PureTech Health and Optima Health

Assuming the 90 days trading horizon PureTech Health is expected to generate 2.05 times less return on investment than Optima Health. In addition to that, PureTech Health is 1.19 times more volatile than Optima Health plc. It trades about 0.04 of its total potential returns per unit of risk. Optima Health plc is currently generating about 0.09 per unit of volatility. If you would invest  17,800  in Optima Health plc on April 20, 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

PureTech Health plc  vs.  Optima Health plc

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.

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.

Pair Trading with PureTech Health and Optima Health

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

The idea behind PureTech Health plc and Optima 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.

Check out your portfolio center.

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 Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.