Correlation Between CEOTRONICS and Omnicom

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

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

Diversification Opportunities for CEOTRONICS and Omnicom

-0.13

Correlation Coefficient

CEOTRONICS  Omnicom

Good diversification

The 3 months correlation between CEOTRONICS and Omnicom is -0.13. Overlapping area represents the amount of risk that can be diversified away by holding CEOTRONICS and Omnicom Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Omnicom Group and CEOTRONICS 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 CEOTRONICS are associated (or correlated) with Omnicom. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Omnicom Group has no effect on the direction of CEOTRONICS i.e., CEOTRONICS and Omnicom go up and down completely randomly.

Pair Corralation between CEOTRONICS and Omnicom

Assuming the 90 days trading horizon CEOTRONICS is expected to generate 1.87 times more return on investment than Omnicom. However, CEOTRONICS is 1.87 times more volatile than Omnicom Group. It trades about 0.04 of its potential returns per unit of risk. Omnicom Group is currently generating about 0.02 per unit of risk. If you would invest  427.00  in CEOTRONICS on September 29, 2024 and sell it today you would earn a total of  148.00  from holding CEOTRONICS or generate 34.66% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	99.8%
Values	Daily Returns

CEOTRONICS  vs.  Omnicom Group

CEOTRONICS

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in CEOTRONICS are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, CEOTRONICS may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Omnicom Group

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Omnicom Group has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest uncertain performance, the Stock's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Pair Trading with CEOTRONICS and Omnicom

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

The idea behind CEOTRONICS and Omnicom Group 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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..