Correlation Between Air New and OOhMedia
Can any of the company-specific risk be diversified away by investing in both Air New 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 Air New and OOhMedia into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Air New Zealand and oOhMedia, you can compare the effects of market volatilities on Air New 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 Air New with a short position of OOhMedia. Check out your portfolio center. Please also check ongoing floating volatility patterns of Air New and OOhMedia.
Diversification Opportunities for Air New and OOhMedia
Very good diversification
The 3 months correlation between Air and OOhMedia is -0.36. Overlapping area represents the amount of risk that can be diversified away by holding Air New Zealand and oOhMedia in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on oOhMedia and Air New 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 Air New Zealand 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 Air New i.e., Air New and OOhMedia go up and down completely randomly.
Pair Corralation between Air New and OOhMedia
Assuming the 90 days trading horizon Air New Zealand is expected to under-perform the OOhMedia. But the stock apears to be less risky and, when comparing its historical volatility, Air New Zealand is 1.62 times less risky than OOhMedia. The stock trades about -0.02 of its potential returns per unit of risk. The oOhMedia is currently generating about 0.0 of returns per unit of risk over similar time horizon. If you would invest 129.00 in oOhMedia on October 13, 2024 and sell it today you would lose (10.00) from holding oOhMedia or give up 7.75% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Air New Zealand vs. oOhMedia
Performance |
| Timeline |
| Air New Zealand |
| oOhMedia |
Air New and OOhMedia Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Air New and OOhMedia
The main advantage of trading using opposite Air New and OOhMedia positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Air New 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.| Air New vs. Aeon Metals | Air New vs. Queste Communications | Air New vs. Aussie Broadband | Air New vs. Falcon Metals |
| OOhMedia vs. Aeon Metals | OOhMedia vs. Air New Zealand | OOhMedia vs. Stelar Metals | OOhMedia vs. Kip McGrath Education |
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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.
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