Correlation Between AiMedia Technologies and Oceania Healthcare

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

By analyzing existing cross correlation between AiMedia Technologies and Oceania Healthcare, you can compare the effects of market volatilities on AiMedia Technologies and Oceania Healthcare 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 AiMedia Technologies with a short position of Oceania Healthcare. Check out your portfolio center. Please also check ongoing floating volatility patterns of AiMedia Technologies and Oceania Healthcare.

Diversification Opportunities for AiMedia Technologies and Oceania Healthcare

-0.22

Correlation Coefficient

AiMedia Technologies  Oceania Healthcare

Very good diversification

The 3 months correlation between AiMedia and Oceania is -0.22. Overlapping area represents the amount of risk that can be diversified away by holding AiMedia Technologies and Oceania Healthcare in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Oceania Healthcare and AiMedia Technologies 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 AiMedia Technologies are associated (or correlated) with Oceania Healthcare. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Oceania Healthcare has no effect on the direction of AiMedia Technologies i.e., AiMedia Technologies and Oceania Healthcare go up and down completely randomly.

Pair Corralation between AiMedia Technologies and Oceania Healthcare

Assuming the 90 days trading horizon AiMedia Technologies is expected to generate 1.26 times more return on investment than Oceania Healthcare. However, AiMedia Technologies is 1.26 times more volatile than Oceania Healthcare. It trades about 0.12 of its potential returns per unit of risk. Oceania Healthcare is currently generating about 0.0 per unit of risk. If you would invest  69.00  in AiMedia Technologies on September 25, 2024 and sell it today you would earn a total of  22.00  from holding AiMedia Technologies or generate 31.88% return on investment over 90 days.

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

AiMedia Technologies  vs.  Oceania Healthcare

AiMedia Technologies

Risk-Adjusted Performance

9 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in AiMedia Technologies are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain primary indicators, AiMedia Technologies unveiled solid returns over the last few months and may actually be approaching a breakup point.

Oceania Healthcare

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Oceania Healthcare has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Oceania Healthcare is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with AiMedia Technologies and Oceania Healthcare

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

The idea behind AiMedia Technologies and Oceania Healthcare 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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.