Correlation Between Rio Tinto and OOhMedia
Can any of the company-specific risk be diversified away by investing in both Rio Tinto 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 Rio Tinto and OOhMedia into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Rio Tinto and oOhMedia, you can compare the effects of market volatilities on Rio Tinto 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 Rio Tinto with a short position of OOhMedia. Check out your portfolio center. Please also check ongoing floating volatility patterns of Rio Tinto and OOhMedia.
Diversification Opportunities for Rio Tinto and OOhMedia
Significant diversification
The 3 months correlation between Rio and OOhMedia is 0.05. Overlapping area represents the amount of risk that can be diversified away by holding Rio Tinto and oOhMedia in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on oOhMedia and Rio Tinto 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 Rio Tinto 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 Rio Tinto i.e., Rio Tinto and OOhMedia go up and down completely randomly.
Pair Corralation between Rio Tinto and OOhMedia
Assuming the 90 days trading horizon Rio Tinto is expected to under-perform the OOhMedia. In addition to that, Rio Tinto is 1.36 times more volatile than oOhMedia. It trades about -0.08 of its total potential returns per unit of risk. oOhMedia is currently generating about 0.08 per unit of volatility. If you would invest 123.00 in oOhMedia on September 2, 2024 and sell it today you would earn a total of 2.00 from holding oOhMedia or generate 1.63% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Rio Tinto vs. oOhMedia
Performance |
| Timeline |
| Rio Tinto |
| oOhMedia |
Rio Tinto and OOhMedia Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Rio Tinto and OOhMedia
The main advantage of trading using opposite Rio Tinto and OOhMedia positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Rio Tinto 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.| Rio Tinto vs. Super Retail Group | Rio Tinto vs. Ainsworth Game Technology | Rio Tinto vs. EROAD | Rio Tinto vs. Computershare |
| OOhMedia vs. Energy Resources | OOhMedia vs. 88 Energy | OOhMedia vs. A1 Investments Resources | OOhMedia vs. Coronado Global Resources |
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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.
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