Correlation Between Overactive Media and Tesla

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

By analyzing existing cross correlation between Overactive Media Corp and Tesla Inc CDR, you can compare the effects of market volatilities on Overactive Media and Tesla 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 Overactive Media with a short position of Tesla. Check out your portfolio center. Please also check ongoing floating volatility patterns of Overactive Media and Tesla.

Diversification Opportunities for Overactive Media and Tesla

-0.5

Correlation Coefficient

Overactive Media  Tesla

Very good diversification

The 3 months correlation between Overactive and Tesla is -0.5. Overlapping area represents the amount of risk that can be diversified away by holding Overactive Media Corp and Tesla Inc CDR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tesla Inc CDR and Overactive Media 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 Overactive Media Corp are associated (or correlated) with Tesla. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tesla Inc CDR has no effect on the direction of Overactive Media i.e., Overactive Media and Tesla go up and down completely randomly.

Pair Corralation between Overactive Media and Tesla

Assuming the 90 days horizon Overactive Media Corp is expected to generate 1.53 times more return on investment than Tesla. However, Overactive Media is 1.53 times more volatile than Tesla Inc CDR. It trades about 0.07 of its potential returns per unit of risk. Tesla Inc CDR is currently generating about -0.13 per unit of risk. If you would invest  23.00  in Overactive Media Corp on December 30, 2024 and sell it today you would earn a total of  4.00  from holding Overactive Media Corp or generate 17.39% return on investment over 90 days.

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

Overactive Media Corp  vs.  Tesla Inc CDR

Overactive Media Corp

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Overactive Media Corp are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak basic indicators, Overactive Media showed solid returns over the last few months and may actually be approaching a breakup point.

Tesla Inc CDR

Risk-Adjusted Performance

Very Weak

Over the last 90 days Tesla Inc CDR has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unfluctuating performance in the last few months, the Stock's technical and fundamental indicators remain rather sound which may send shares a bit higher in April 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Pair Trading with Overactive Media and Tesla

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

The idea behind Overactive Media Corp and Tesla Inc CDR 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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.