Correlation Between Sidma SA and Optima Bank

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

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

Diversification Opportunities for Sidma SA and Optima Bank

0.1

Correlation Coefficient

Sidma SA  Optima Bank

Average diversification

The 3 months correlation between Sidma and Optima is 0.1. Overlapping area represents the amount of risk that can be diversified away by holding Sidma SA Steel and Optima bank SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Optima bank SA and Sidma SA 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 Sidma SA Steel are associated (or correlated) with Optima Bank. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Optima bank SA has no effect on the direction of Sidma SA i.e., Sidma SA and Optima Bank go up and down completely randomly.

Pair Corralation between Sidma SA and Optima Bank

Assuming the 90 days trading horizon Sidma SA is expected to generate 9.33 times less return on investment than Optima Bank. But when comparing it to its historical volatility, Sidma SA Steel is 1.45 times less risky than Optima Bank. It trades about 0.05 of its potential returns per unit of risk. Optima bank SA is currently generating about 0.32 of returns per unit of risk over similar time horizon. If you would invest  456.00  in Optima bank SA on April 24, 2025 and sell it today you would earn a total of  261.00  from holding Optima bank SA or generate 57.24% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	98.41%
Values	Daily Returns

Sidma SA Steel  vs.  Optima bank SA

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.

Optima bank SA

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Optima bank SA are ranked lower than 25 (%) of all global equities and portfolios over the last 90 days. Despite somewhat uncertain basic indicators, Optima Bank sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Sidma SA and Optima Bank

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

The idea behind Sidma SA Steel and Optima bank SA 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 CEOs Directory module to screen CEOs from public companies around the world.