Correlation Between One Media and Kodal Minerals

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

By analyzing existing cross correlation between One Media iP and Kodal Minerals PLC, you can compare the effects of market volatilities on One Media and Kodal Minerals 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 One Media with a short position of Kodal Minerals. Check out your portfolio center. Please also check ongoing floating volatility patterns of One Media and Kodal Minerals.

Diversification Opportunities for One Media and Kodal Minerals

0.35

Correlation Coefficient

One Media  Kodal Minerals

Weak diversification

The 3 months correlation between One and Kodal is 0.35. Overlapping area represents the amount of risk that can be diversified away by holding One Media iP and Kodal Minerals PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kodal Minerals PLC and One 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 One Media iP are associated (or correlated) with Kodal Minerals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kodal Minerals PLC has no effect on the direction of One Media i.e., One Media and Kodal Minerals go up and down completely randomly.

Pair Corralation between One Media and Kodal Minerals

Assuming the 90 days trading horizon One Media is expected to generate 1.42 times less return on investment than Kodal Minerals. But when comparing it to its historical volatility, One Media iP is 1.78 times less risky than Kodal Minerals. It trades about 0.09 of its potential returns per unit of risk. Kodal Minerals PLC is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest  41.00  in Kodal Minerals PLC on October 24, 2024 and sell it today you would earn a total of  6.00  from holding Kodal Minerals PLC or generate 14.63% return on investment over 90 days.

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

One Media iP  vs.  Kodal Minerals PLC

One Media iP

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in One Media iP are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, One Media unveiled solid returns over the last few months and may actually be approaching a breakup point.

Kodal Minerals PLC

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Kodal Minerals PLC are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady technical and fundamental indicators, Kodal Minerals exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with One Media and Kodal Minerals

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

The idea behind One Media iP and Kodal Minerals PLC 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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.