Correlation Between OOhMedia and Challenger

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

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

Diversification Opportunities for OOhMedia and Challenger

-0.42

Correlation Coefficient

OOhMedia  Challenger

Very good diversification

The 3 months correlation between OOhMedia and Challenger is -0.42. Overlapping area represents the amount of risk that can be diversified away by holding oOhMedia and Challenger in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Challenger and OOhMedia 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 oOhMedia are associated (or correlated) with Challenger. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Challenger has no effect on the direction of OOhMedia i.e., OOhMedia and Challenger go up and down completely randomly.

Pair Corralation between OOhMedia and Challenger

Assuming the 90 days trading horizon oOhMedia is expected to generate 1.21 times more return on investment than Challenger. However, OOhMedia is 1.21 times more volatile than Challenger. It trades about 0.03 of its potential returns per unit of risk. Challenger is currently generating about 0.01 per unit of risk. If you would invest  131.00  in oOhMedia on December 3, 2024 and sell it today you would earn a total of  18.00  from holding oOhMedia or generate 13.74% return on investment over 90 days.

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

oOhMedia  vs.  Challenger

oOhMedia

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in oOhMedia are ranked lower than 7 (%) 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.

Challenger

Risk-Adjusted Performance

Very Weak

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

Pair Trading with OOhMedia and Challenger

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

The idea behind oOhMedia and Challenger 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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.