Correlation Between Oceana and Brimstone Investment
Can any of the company-specific risk be diversified away by investing in both Oceana and Brimstone Investment 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 Oceana and Brimstone Investment into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Oceana and Brimstone Investment, you can compare the effects of market volatilities on Oceana and Brimstone Investment 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 Oceana with a short position of Brimstone Investment. Check out your portfolio center. Please also check ongoing floating volatility patterns of Oceana and Brimstone Investment.
Diversification Opportunities for Oceana and Brimstone Investment
-0.04 | Correlation Coefficient |
Good diversification
The 3 months correlation between Oceana and Brimstone is -0.04. Overlapping area represents the amount of risk that can be diversified away by holding Oceana and Brimstone Investment in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Brimstone Investment and Oceana 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 Oceana are associated (or correlated) with Brimstone Investment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Brimstone Investment has no effect on the direction of Oceana i.e., Oceana and Brimstone Investment go up and down completely randomly.
Pair Corralation between Oceana and Brimstone Investment
Assuming the 90 days trading horizon Oceana is expected to generate 0.39 times more return on investment than Brimstone Investment. However, Oceana is 2.59 times less risky than Brimstone Investment. It trades about 0.11 of its potential returns per unit of risk. Brimstone Investment is currently generating about -0.05 per unit of risk. If you would invest 666,800 in Oceana on August 30, 2024 and sell it today you would earn a total of 13,200 from holding Oceana or generate 1.98% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Oceana vs. Brimstone Investment
Performance |
| Timeline |
| Oceana |
| Brimstone Investment |
Oceana and Brimstone Investment Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Oceana and Brimstone Investment
The main advantage of trading using opposite Oceana and Brimstone Investment positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Oceana position performs unexpectedly, Brimstone Investment 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 Brimstone Investment will offset losses from the drop in Brimstone Investment's long position.| Oceana vs. eMedia Holdings Limited | Oceana vs. Safari Investments RSA | Oceana vs. Hosken Consolidated Investments | Oceana vs. Astoria Investments |
| Brimstone Investment vs. Tiger Brands | Brimstone Investment vs. RCL Foods | Brimstone Investment vs. Oceana |
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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.
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