Correlation Between OOhMedia and Wam Leaders

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

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

Diversification Opportunities for OOhMedia and Wam Leaders

0.45

Correlation Coefficient

OOhMedia  Wam Leaders

Very weak diversification

The 3 months correlation between OOhMedia and Wam is 0.45. Overlapping area represents the amount of risk that can be diversified away by holding oOhMedia and Wam Leaders in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Wam Leaders 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 Wam Leaders. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Wam Leaders has no effect on the direction of OOhMedia i.e., OOhMedia and Wam Leaders go up and down completely randomly.

Pair Corralation between OOhMedia and Wam Leaders

Assuming the 90 days trading horizon oOhMedia is expected to generate 2.68 times more return on investment than Wam Leaders. However, OOhMedia is 2.68 times more volatile than Wam Leaders. It trades about 0.17 of its potential returns per unit of risk. Wam Leaders is currently generating about 0.05 per unit of risk. If you would invest  114.00  in oOhMedia on December 29, 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	Weak
Accuracy	100.0%
Values	Daily Returns

oOhMedia  vs.  Wam Leaders

oOhMedia

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in oOhMedia are ranked lower than 13 (%) 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.

Wam Leaders

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Wam Leaders are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable technical and fundamental indicators, Wam Leaders 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 Wam Leaders

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

The idea behind oOhMedia and Wam Leaders 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.

Check out your portfolio center.

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 Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.