Correlation Between Health and OOhMedia
Can any of the company-specific risk be diversified away by investing in both Health 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 Health and OOhMedia into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Health and Plant and oOhMedia, you can compare the effects of market volatilities on Health 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 Health with a short position of OOhMedia. Check out your portfolio center. Please also check ongoing floating volatility patterns of Health and OOhMedia.
Diversification Opportunities for Health and OOhMedia
Pay attention - limited upside
The 3 months correlation between Health and OOhMedia is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Health and Plant and oOhMedia in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on oOhMedia and Health 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 Health and Plant 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 Health i.e., Health and OOhMedia go up and down completely randomly.
Pair Corralation between Health and OOhMedia
Assuming the 90 days trading horizon Health and Plant is expected to under-perform the OOhMedia. But the stock apears to be less risky and, when comparing its historical volatility, Health and Plant 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 138.00 in oOhMedia on November 2, 2024 and sell it today you would lose (22.00) from holding oOhMedia or give up 15.94% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Flat |
| Strength | Insignificant |
| Accuracy | 99.8% |
| Values | Daily Returns |
Health and Plant vs. oOhMedia
Performance |
| Timeline |
| Health and Plant |
| oOhMedia |
Health and OOhMedia Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Health and OOhMedia
The main advantage of trading using opposite Health and OOhMedia positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Health 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.| Health vs. Clime Investment Management | Health vs. Diversified United Investment | Health vs. Treasury Wine Estates | Health vs. IDP Education |
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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 Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
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