Correlation Between OOhMedia and Nine Entertainment

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

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

Diversification Opportunities for OOhMedia and Nine Entertainment

0.91

Correlation Coefficient

OOhMedia  Nine Entertainment

Almost no diversification

The 3 months correlation between OOhMedia and Nine is 0.91. Overlapping area represents the amount of risk that can be diversified away by holding oOhMedia and Nine Entertainment Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nine Entertainment 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 Nine Entertainment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nine Entertainment has no effect on the direction of OOhMedia i.e., OOhMedia and Nine Entertainment go up and down completely randomly.

Pair Corralation between OOhMedia and Nine Entertainment

Assuming the 90 days trading horizon oOhMedia is expected to generate 0.87 times more return on investment than Nine Entertainment. However, oOhMedia is 1.15 times less risky than Nine Entertainment. It trades about 0.16 of its potential returns per unit of risk. Nine Entertainment Co is currently generating about 0.12 per unit of risk. If you would invest  114.00  in oOhMedia on December 30, 2024 and sell it today you would earn a total of  38.00  from holding oOhMedia or generate 33.33% return on investment over 90 days.

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

oOhMedia  vs.  Nine Entertainment Co

oOhMedia

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in oOhMedia are ranked lower than 12 (%) 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.

Nine Entertainment

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Nine Entertainment Co are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain fundamental indicators, Nine Entertainment unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with OOhMedia and Nine Entertainment

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

The idea behind oOhMedia and Nine Entertainment Co 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 Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.