Correlation Between Aussie Broadband and OOhMedia
Can any of the company-specific risk be diversified away by investing in both Aussie Broadband and OOhMedia 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 Aussie Broadband and OOhMedia into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Aussie Broadband and oOhMedia, you can compare the effects of market volatilities on Aussie Broadband and OOhMedia 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 Aussie Broadband with a short position of OOhMedia. Check out your portfolio center. Please also check ongoing floating volatility patterns of Aussie Broadband and OOhMedia.
Diversification Opportunities for Aussie Broadband and OOhMedia
0.29 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Aussie and OOhMedia is 0.29. Overlapping area represents the amount of risk that can be diversified away by holding Aussie Broadband and oOhMedia in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on oOhMedia and Aussie Broadband 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 Aussie Broadband are associated (or correlated) with OOhMedia. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of oOhMedia has no effect on the direction of Aussie Broadband i.e., Aussie Broadband and OOhMedia go up and down completely randomly.
Pair Corralation between Aussie Broadband and OOhMedia
Assuming the 90 days trading horizon Aussie Broadband is expected to generate 0.87 times more return on investment than OOhMedia. However, Aussie Broadband is 1.15 times less risky than OOhMedia. It trades about 0.31 of its potential returns per unit of risk. oOhMedia is currently generating about -0.03 per unit of risk. If you would invest 351.00 in Aussie Broadband on November 5, 2024 and sell it today you would earn a total of 43.00 from holding Aussie Broadband or generate 12.25% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Aussie Broadband vs. oOhMedia
Performance |
| Timeline |
| Aussie Broadband |
| oOhMedia |
Aussie Broadband and OOhMedia Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Aussie Broadband and OOhMedia
The main advantage of trading using opposite Aussie Broadband and OOhMedia positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Aussie Broadband position performs unexpectedly, OOhMedia 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 OOhMedia will offset losses from the drop in OOhMedia's long position.| Aussie Broadband vs. Black Rock Mining | Aussie Broadband vs. Sun Silver Limited | Aussie Broadband vs. Evolution Mining | Aussie Broadband vs. Pure Foods Tasmania |
| OOhMedia vs. Torque Metals | OOhMedia vs. FireFly Metals | OOhMedia vs. Treasury Wine Estates | OOhMedia vs. Mayfield Childcare |
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 Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
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