Correlation Between Shenzhen and Omnijoi Media

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

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

Diversification Opportunities for Shenzhen and Omnijoi Media

0.64

Correlation Coefficient

Shenzhen  Omnijoi Media

Poor diversification

The 3 months correlation between Shenzhen and Omnijoi is 0.64. Overlapping area represents the amount of risk that can be diversified away by holding Shenzhen AV Display Co and Omnijoi Media Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Omnijoi Media Corp and Shenzhen 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 Shenzhen AV Display Co are associated (or correlated) with Omnijoi Media. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Omnijoi Media Corp has no effect on the direction of Shenzhen i.e., Shenzhen and Omnijoi Media go up and down completely randomly.

Pair Corralation between Shenzhen and Omnijoi Media

Assuming the 90 days trading horizon Shenzhen is expected to generate 3.25 times less return on investment than Omnijoi Media. But when comparing it to its historical volatility, Shenzhen AV Display Co is 1.42 times less risky than Omnijoi Media. It trades about 0.02 of its potential returns per unit of risk. Omnijoi Media Corp is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest  767.00  in Omnijoi Media Corp on October 11, 2024 and sell it today you would earn a total of  62.00  from holding Omnijoi Media Corp or generate 8.08% return on investment over 90 days.

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

Shenzhen AV Display Co  vs.  Omnijoi Media Corp

Shenzhen AV Display

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Shenzhen AV Display Co are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, Shenzhen is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Omnijoi Media Corp

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Omnijoi Media Corp are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Omnijoi Media sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Shenzhen and Omnijoi Media

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

The idea behind Shenzhen AV Display Co and Omnijoi Media Corp 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.

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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 Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.