Correlation Between Optima Bank and Alpha Trust

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

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

Diversification Opportunities for Optima Bank and Alpha Trust

0.89

Correlation Coefficient

Optima Bank  Alpha Trust

Very poor diversification

The 3 months correlation between Optima and Alpha is 0.89. Overlapping area represents the amount of risk that can be diversified away by holding Optima bank SA and Alpha Trust Andromeda in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Alpha Trust Andromeda and Optima Bank 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 bank SA are associated (or correlated) with Alpha Trust. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Alpha Trust Andromeda has no effect on the direction of Optima Bank i.e., Optima Bank and Alpha Trust go up and down completely randomly.

Pair Corralation between Optima Bank and Alpha Trust

Assuming the 90 days trading horizon Optima bank SA is expected to generate 2.89 times more return on investment than Alpha Trust. However, Optima Bank is 2.89 times more volatile than Alpha Trust Andromeda. It trades about 0.31 of its potential returns per unit of risk. Alpha Trust Andromeda is currently generating about 0.17 per unit of risk. If you would invest  516.00  in Optima bank SA on May 17, 2025 and sell it today you would earn a total of  294.00  from holding Optima bank SA or generate 56.98% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	98.44%
Values	Daily Returns

Optima bank SA  vs.  Alpha Trust Andromeda

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

Alpha Trust Andromeda

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Alpha Trust Andromeda are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. Despite somewhat uncertain basic indicators, Alpha Trust may actually be approaching a critical reversion point that can send shares even higher in September 2025.

Pair Trading with Optima Bank and Alpha Trust

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

The idea behind Optima bank SA and Alpha Trust Andromeda 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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.