Correlation Between Spirit Telecom and OOhMedia

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

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

Diversification Opportunities for Spirit Telecom and OOhMedia

-0.32

Correlation Coefficient

Spirit Telecom  OOhMedia

Very good diversification

The 3 months correlation between Spirit and OOhMedia is -0.32. Overlapping area represents the amount of risk that can be diversified away by holding Spirit Telecom and oOhMedia in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on oOhMedia and Spirit Telecom 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 Spirit Telecom are associated (or correlated) with OOhMedia. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of oOhMedia has no effect on the direction of Spirit Telecom i.e., Spirit Telecom and OOhMedia go up and down completely randomly.

Pair Corralation between Spirit Telecom and OOhMedia

Assuming the 90 days trading horizon Spirit Telecom is expected to generate 5.97 times less return on investment than OOhMedia. But when comparing it to its historical volatility, Spirit Telecom is 1.3 times less risky than OOhMedia. It trades about 0.07 of its potential returns per unit of risk. oOhMedia is currently generating about 0.31 of returns per unit of risk over similar time horizon. If you would invest  115.00  in oOhMedia on December 4, 2024 and sell it today you would earn a total of  34.00  from holding oOhMedia or generate 29.57% return on investment over 90 days.

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

Spirit Telecom  vs.  oOhMedia

Spirit Telecom

Risk-Adjusted Performance

Very Weak

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

oOhMedia

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in oOhMedia are ranked lower than 6 (%) 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.

Pair Trading with Spirit Telecom and OOhMedia

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

The idea behind Spirit Telecom and oOhMedia 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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.