Correlation Between Alpha Trust and Optima Bank

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

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

Diversification Opportunities for Alpha Trust and Optima Bank

0.64

Correlation Coefficient

Alpha Trust  Optima Bank

Poor diversification

The 3 months correlation between Alpha and Optima is 0.64. Overlapping area represents the amount of risk that can be diversified away by holding Alpha Trust Andromeda 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 Alpha Trust 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 Alpha Trust Andromeda 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 Alpha Trust i.e., Alpha Trust and Optima Bank go up and down completely randomly.

Pair Corralation between Alpha Trust and Optima Bank

Assuming the 90 days trading horizon Alpha Trust is expected to generate 5.45 times less return on investment than Optima Bank. But when comparing it to its historical volatility, Alpha Trust Andromeda is 2.72 times less risky than Optima Bank. It trades about 0.14 of its potential returns per unit of risk. Optima bank SA is currently generating about 0.29 of returns per unit of risk over similar time horizon. If you would invest  553.00  in Optima bank SA on May 21, 2025 and sell it today you would earn a total of  274.00  from holding Optima bank SA or generate 49.55% return on investment over 90 days.

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

Alpha Trust Andromeda  vs.  Optima bank SA

Alpha Trust Andromeda

Risk-Adjusted Performance

Fair

Compared to the overall equity markets, risk-adjusted returns on investments in Alpha Trust Andromeda are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Alpha Trust may actually be approaching a critical reversion point that can send shares even higher in September 2025.

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 22 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Optima Bank sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Alpha Trust and Optima Bank

The main advantage of trading using opposite Alpha Trust and Optima Bank positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Alpha Trust 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 Alpha Trust Andromeda 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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.