Correlation Between Chembond Chemicals and OnMobile Global

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

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

Diversification Opportunities for Chembond Chemicals and OnMobile Global

0.09

Correlation Coefficient

Chembond Chemicals  OnMobile Global

Significant diversification

The 3 months correlation between Chembond and OnMobile is 0.09. Overlapping area represents the amount of risk that can be diversified away by holding Chembond Chemicals and OnMobile Global Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on OnMobile Global and Chembond Chemicals 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 Chembond Chemicals are associated (or correlated) with OnMobile Global. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of OnMobile Global has no effect on the direction of Chembond Chemicals i.e., Chembond Chemicals and OnMobile Global go up and down completely randomly.

Pair Corralation between Chembond Chemicals and OnMobile Global

Assuming the 90 days trading horizon Chembond Chemicals is expected to generate 0.6 times more return on investment than OnMobile Global. However, Chembond Chemicals is 1.66 times less risky than OnMobile Global. It trades about 0.08 of its potential returns per unit of risk. OnMobile Global Limited is currently generating about 0.0 per unit of risk. If you would invest  55,950  in Chembond Chemicals on October 6, 2024 and sell it today you would earn a total of  5,400  from holding Chembond Chemicals or generate 9.65% return on investment over 90 days.

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

Chembond Chemicals  vs.  OnMobile Global Limited

Chembond Chemicals

Risk-Adjusted Performance

6 of 100

Modest

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

OnMobile Global

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days OnMobile Global Limited has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent forward indicators, OnMobile Global is not utilizing all of its potentials. The current stock price mess, may contribute to short-term losses for the institutional investors.

Pair Trading with Chembond Chemicals and OnMobile Global

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

The idea behind Chembond Chemicals and OnMobile Global Limited 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 Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.