Correlation Between OOhMedia and Energy Resources
Can any of the company-specific risk be diversified away by investing in both OOhMedia and Energy Resources 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 OOhMedia and Energy Resources into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between oOhMedia and Energy Resources, you can compare the effects of market volatilities on OOhMedia and Energy Resources 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 OOhMedia with a short position of Energy Resources. Check out your portfolio center. Please also check ongoing floating volatility patterns of OOhMedia and Energy Resources.
Diversification Opportunities for OOhMedia and Energy Resources
0.67 | Correlation Coefficient |
Poor diversification
The 3 months correlation between OOhMedia and Energy is 0.67. Overlapping area represents the amount of risk that can be diversified away by holding oOhMedia and Energy Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Energy Resources and OOhMedia 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 oOhMedia are associated (or correlated) with Energy Resources. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Energy Resources has no effect on the direction of OOhMedia i.e., OOhMedia and Energy Resources go up and down completely randomly.
Pair Corralation between OOhMedia and Energy Resources
Assuming the 90 days trading horizon oOhMedia is expected to under-perform the Energy Resources. But the stock apears to be less risky and, when comparing its historical volatility, oOhMedia is 11.05 times less risky than Energy Resources. The stock trades about -0.09 of its potential returns per unit of risk. The Energy Resources is currently generating about 0.0 of returns per unit of risk over similar time horizon. If you would invest 5.40 in Energy Resources on September 3, 2024 and sell it today you would lose (5.20) from holding Energy Resources or give up 96.3% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
oOhMedia vs. Energy Resources
Performance |
| Timeline |
| oOhMedia |
| Energy Resources |
OOhMedia and Energy Resources Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with OOhMedia and Energy Resources
The main advantage of trading using opposite OOhMedia and Energy Resources positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if OOhMedia position performs unexpectedly, Energy Resources 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 Energy Resources will offset losses from the drop in Energy Resources' long position.| OOhMedia vs. Vulcan Steel | OOhMedia vs. Champion Iron | OOhMedia vs. The Environmental Group | OOhMedia vs. Nufarm Finance NZ |
| Energy Resources vs. Macquarie Bank Limited | Energy Resources vs. National Australia Bank | Energy Resources vs. Retail Food Group | Energy Resources vs. G8 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 Portfolio Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.
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