Correlation Between Tesco PLC and Om Holdings
Can any of the company-specific risk be diversified away by investing in both Tesco PLC and Om Holdings 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 Tesco PLC and Om Holdings into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Tesco PLC and Om Holdings International, you can compare the effects of market volatilities on Tesco PLC and Om Holdings 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 Tesco PLC with a short position of Om Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of Tesco PLC and Om Holdings.
Diversification Opportunities for Tesco PLC and Om Holdings
0.4 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Tesco and OMHI is 0.4. Overlapping area represents the amount of risk that can be diversified away by holding Tesco PLC and Om Holdings International in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Om Holdings International and Tesco PLC 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 Tesco PLC are associated (or correlated) with Om Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Om Holdings International has no effect on the direction of Tesco PLC i.e., Tesco PLC and Om Holdings go up and down completely randomly.
Pair Corralation between Tesco PLC and Om Holdings
Assuming the 90 days horizon Tesco PLC is expected to generate 0.37 times more return on investment than Om Holdings. However, Tesco PLC is 2.7 times less risky than Om Holdings. It trades about 0.06 of its potential returns per unit of risk. Om Holdings International is currently generating about -0.04 per unit of risk. 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 |
Tesco PLC vs. Om Holdings International
Performance |
| Timeline |
| Tesco PLC |
| Om Holdings International |
Tesco PLC and Om Holdings Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Tesco PLC and Om Holdings
The main advantage of trading using opposite Tesco PLC and Om Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Tesco PLC position performs unexpectedly, Om Holdings 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 Om Holdings will offset losses from the drop in Om Holdings' long position.| Tesco PLC vs. Ocado Group PLC | Tesco PLC vs. Carrefour SA PK | Tesco PLC vs. J Sainsbury PLC | Tesco PLC vs. Tesco PLC |
| Om Holdings vs. Carrefour SA | Om Holdings vs. J Sainsbury plc | Om Holdings vs. Carrefour SA PK | Om Holdings vs. Kesko Oyj ADR |
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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..
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