Correlation Between Oceanic Beverages and C Media

Can any of the company-specific risk be diversified away by investing in both Oceanic Beverages and C Media 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 Oceanic Beverages and C Media into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Oceanic Beverages Co and C Media Electronics, you can compare the effects of market volatilities on Oceanic Beverages and C Media 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 Oceanic Beverages with a short position of C Media. Check out your portfolio center. Please also check ongoing floating volatility patterns of Oceanic Beverages and C Media.

Diversification Opportunities for Oceanic Beverages and C Media

0.19

Correlation Coefficient

Oceanic Beverages  C Media

Average diversification

The 3 months correlation between Oceanic and 6237 is 0.19. Overlapping area represents the amount of risk that can be diversified away by holding Oceanic Beverages Co and C Media Electronics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on C Media Electronics and Oceanic Beverages 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 Oceanic Beverages Co are associated (or correlated) with C Media. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of C Media Electronics has no effect on the direction of Oceanic Beverages i.e., Oceanic Beverages and C Media go up and down completely randomly.

Pair Corralation between Oceanic Beverages and C Media

Assuming the 90 days trading horizon Oceanic Beverages Co is expected to generate 1.2 times more return on investment than C Media. However, Oceanic Beverages is 1.2 times more volatile than C Media Electronics. It trades about 0.09 of its potential returns per unit of risk. C Media Electronics is currently generating about -0.05 per unit of risk. If you would invest  1,250  in Oceanic Beverages Co on September 15, 2024 and sell it today you would earn a total of  50.00  from holding Oceanic Beverages Co or generate 4.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Oceanic Beverages Co  vs.  C Media Electronics

Oceanic Beverages

Risk-Adjusted Performance

6 of 100

Very Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Oceanic Beverages Co are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Oceanic Beverages may actually be approaching a critical reversion point that can send shares even higher in January 2025.

C Media Electronics

Risk-Adjusted Performance

4 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in C Media Electronics are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, C Media may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Oceanic Beverages and C Media

The main advantage of trading using opposite Oceanic Beverages and C Media positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Oceanic Beverages position performs unexpectedly, C Media 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 C Media will offset losses from the drop in C Media's long position.

The idea behind Oceanic Beverages Co and C Media Electronics pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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 Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.