Correlation Between Om Holdings and Tesco PLC
Can any of the company-specific risk be diversified away by investing in both Om Holdings and Tesco PLC 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 Om Holdings and Tesco PLC into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Om Holdings International and Tesco PLC, you can compare the effects of market volatilities on Om Holdings and Tesco PLC 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 Om Holdings with a short position of Tesco PLC. Check out your portfolio center. Please also check ongoing floating volatility patterns of Om Holdings and Tesco PLC.
Diversification Opportunities for Om Holdings and Tesco PLC
0.4 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between OMHI and Tesco is 0.4. Overlapping area represents the amount of risk that can be diversified away by holding Om Holdings International and Tesco PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tesco PLC and Om Holdings 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 Om Holdings International are associated (or correlated) with Tesco PLC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tesco PLC has no effect on the direction of Om Holdings i.e., Om Holdings and Tesco PLC go up and down completely randomly.
Pair Corralation between Om Holdings and Tesco PLC
Given the investment horizon of 90 days Om Holdings International is expected to under-perform the Tesco PLC. In addition to that, Om Holdings is 2.7 times more volatile than Tesco PLC. It trades about -0.04 of its total potential returns per unit of risk. Tesco PLC is currently generating about 0.06 per unit of volatility. If you would invest 301.00 in Tesco PLC on August 28, 2024 and sell it today you would earn a total of 148.00 from holding Tesco PLC or generate 49.17% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 88.1% |
| Values | Daily Returns |
Om Holdings International vs. Tesco PLC
Performance |
| Timeline |
| Om Holdings International |
| Tesco PLC |
Om Holdings and Tesco PLC Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Om Holdings and Tesco PLC
The main advantage of trading using opposite Om Holdings and Tesco PLC positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Om Holdings position performs unexpectedly, Tesco PLC 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 Tesco PLC will offset losses from the drop in Tesco PLC's long position.| Om Holdings vs. Carrefour SA | Om Holdings vs. J Sainsbury plc | Om Holdings vs. Carrefour SA PK | Om Holdings vs. Kesko Oyj ADR |
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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 Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.
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