Correlation Between Rightmove Plc and Outbrain

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

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

Diversification Opportunities for Rightmove Plc and Outbrain

0.1

Correlation Coefficient

Rightmove Plc  Outbrain

Average diversification

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

Pair Corralation between Rightmove Plc and Outbrain

Assuming the 90 days horizon Rightmove Plc is expected to generate 10.07 times less return on investment than Outbrain. But when comparing it to its historical volatility, Rightmove Plc is 2.25 times less risky than Outbrain. It trades about 0.06 of its potential returns per unit of risk. Outbrain is currently generating about 0.29 of returns per unit of risk over similar time horizon. If you would invest  468.00  in Outbrain on September 13, 2024 and sell it today you would earn a total of  201.00  from holding Outbrain or generate 42.95% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	97.67%
Values	Daily Returns

Rightmove Plc  vs.  Outbrain

Rightmove Plc

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Rightmove Plc has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong basic indicators, Rightmove Plc is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Outbrain

Risk-Adjusted Performance

16 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Outbrain are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. Despite somewhat inconsistent fundamental drivers, Outbrain sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Rightmove Plc and Outbrain

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

The idea behind Rightmove Plc and Outbrain 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 CEOs Directory module to screen CEOs from public companies around the world.