Correlation Between EMedia Holdings and Omnia Holdings

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

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

Diversification Opportunities for EMedia Holdings and Omnia Holdings

0.55

Correlation Coefficient

EMedia Holdings  Omnia Holdings

Very weak diversification

The 3 months correlation between EMedia and Omnia is 0.55. Overlapping area represents the amount of risk that can be diversified away by holding eMedia Holdings Limited and Omnia Holdings Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Omnia Holdings and EMedia Holdings 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 eMedia Holdings Limited are associated (or correlated) with Omnia Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Omnia Holdings has no effect on the direction of EMedia Holdings i.e., EMedia Holdings and Omnia Holdings go up and down completely randomly.

Pair Corralation between EMedia Holdings and Omnia Holdings

Assuming the 90 days trading horizon eMedia Holdings Limited is expected to under-perform the Omnia Holdings. In addition to that, EMedia Holdings is 1.89 times more volatile than Omnia Holdings Limited. It trades about -0.07 of its total potential returns per unit of risk. Omnia Holdings Limited is currently generating about -0.12 per unit of volatility. If you would invest  734,000  in Omnia Holdings Limited on December 21, 2024 and sell it today you would lose (76,300) from holding Omnia Holdings Limited or give up 10.4% of portfolio value over 90 days.

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

eMedia Holdings Limited  vs.  Omnia Holdings Limited

eMedia Holdings

Risk-Adjusted Performance

Very Weak

Over the last 90 days eMedia Holdings Limited has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unsteady performance, the Stock's technical and fundamental indicators remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for the firm shareholders.

Omnia Holdings

Risk-Adjusted Performance

Very Weak

Over the last 90 days Omnia Holdings Limited has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unsteady performance, the Stock's technical and fundamental indicators remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for the firm shareholders.

Pair Trading with EMedia Holdings and Omnia Holdings

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

The idea behind eMedia Holdings Limited and Omnia Holdings 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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.