Correlation Between Seven West and OOhMedia

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

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

Diversification Opportunities for Seven West and OOhMedia

-0.01

Correlation Coefficient

Seven West  OOhMedia

Good diversification

The 3 months correlation between Seven and OOhMedia is -0.01. Overlapping area represents the amount of risk that can be diversified away by holding Seven West Media and oOhMedia in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on oOhMedia and Seven West 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 Seven West Media 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 Seven West i.e., Seven West and OOhMedia go up and down completely randomly.

Pair Corralation between Seven West and OOhMedia

Assuming the 90 days trading horizon Seven West is expected to generate 2.23 times less return on investment than OOhMedia. In addition to that, Seven West is 1.67 times more volatile than oOhMedia. It trades about 0.04 of its total potential returns per unit of risk. oOhMedia is currently generating about 0.16 per unit of volatility. 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 Against
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Seven West Media  vs.  oOhMedia

Seven West Media

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Seven West Media are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain primary indicators, Seven West unveiled solid returns over the last few months and may actually be approaching a breakup point.

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.

Pair Trading with Seven West and OOhMedia

The main advantage of trading using opposite Seven West and OOhMedia positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Seven West 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 Seven West Media 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.

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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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.