Correlation Between Omkar Speciality and Next Mediaworks

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

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

Diversification Opportunities for Omkar Speciality and Next Mediaworks

-0.1

Correlation Coefficient

Omkar Speciality  Next Mediaworks

Good diversification

The 3 months correlation between Omkar and Next is -0.1. Overlapping area represents the amount of risk that can be diversified away by holding Omkar Speciality Chemicals and Next Mediaworks Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Next Mediaworks and Omkar Speciality 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 Omkar Speciality Chemicals are associated (or correlated) with Next Mediaworks. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Next Mediaworks has no effect on the direction of Omkar Speciality i.e., Omkar Speciality and Next Mediaworks go up and down completely randomly.

Pair Corralation between Omkar Speciality and Next Mediaworks

Assuming the 90 days trading horizon Omkar Speciality is expected to generate 1.24 times less return on investment than Next Mediaworks. But when comparing it to its historical volatility, Omkar Speciality Chemicals is 1.53 times less risky than Next Mediaworks. It trades about 0.05 of its potential returns per unit of risk. Next Mediaworks Limited is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest  701.00  in Next Mediaworks Limited on October 27, 2024 and sell it today you would earn a total of  37.00  from holding Next Mediaworks Limited or generate 5.28% return on investment over 90 days.

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

Omkar Speciality Chemicals  vs.  Next Mediaworks Limited

Omkar Speciality Che

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Omkar Speciality Chemicals are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite fairly uncertain technical indicators, Omkar Speciality may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Next Mediaworks

Risk-Adjusted Performance

3 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Next Mediaworks Limited are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady fundamental indicators, Next Mediaworks may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Omkar Speciality and Next Mediaworks

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

The idea behind Omkar Speciality Chemicals and Next Mediaworks 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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.