Correlation Between Ecofibre and OOhMedia

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

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

Diversification Opportunities for Ecofibre and OOhMedia

-0.78

Correlation Coefficient

Ecofibre  OOhMedia

Pay attention - limited upside

The 3 months correlation between Ecofibre and OOhMedia is -0.78. Overlapping area represents the amount of risk that can be diversified away by holding Ecofibre and oOhMedia in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on oOhMedia and Ecofibre 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 Ecofibre are associated (or correlated) with OOhMedia. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of oOhMedia has no effect on the direction of Ecofibre i.e., Ecofibre and OOhMedia go up and down completely randomly.

Pair Corralation between Ecofibre and OOhMedia

Assuming the 90 days trading horizon Ecofibre is expected to under-perform the OOhMedia. In addition to that, Ecofibre is 1.81 times more volatile than oOhMedia. It trades about -0.02 of its total potential returns per unit of risk. oOhMedia is currently generating about 0.15 per unit of volatility. If you would invest  114.00  in oOhMedia on December 28, 2024 and sell it today you would earn a total of  33.00  from holding oOhMedia or generate 28.95% return on investment over 90 days.

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

Ecofibre  vs.  oOhMedia

Ecofibre

Risk-Adjusted Performance

Very Weak

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

oOhMedia

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in oOhMedia are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain essential indicators, OOhMedia unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Ecofibre and OOhMedia

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

The idea behind Ecofibre and oOhMedia 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 Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.