Correlation Between Overactive Media and Libero Copper

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

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

Diversification Opportunities for Overactive Media and Libero Copper

0.09

Correlation Coefficient

Overactive Media  Libero Copper

Significant diversification

The 3 months correlation between Overactive and Libero is 0.09. Overlapping area represents the amount of risk that can be diversified away by holding Overactive Media Corp and Libero Copper Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Libero Copper Corp and Overactive Media 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 Overactive Media Corp are associated (or correlated) with Libero Copper. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Libero Copper Corp has no effect on the direction of Overactive Media i.e., Overactive Media and Libero Copper go up and down completely randomly.

Pair Corralation between Overactive Media and Libero Copper

Assuming the 90 days horizon Overactive Media Corp is expected to under-perform the Libero Copper. But the stock apears to be less risky and, when comparing its historical volatility, Overactive Media Corp is 1.41 times less risky than Libero Copper. The stock trades about -0.01 of its potential returns per unit of risk. The Libero Copper Corp is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest  29.00  in Libero Copper Corp on September 29, 2024 and sell it today you would earn a total of  3.00  from holding Libero Copper Corp or generate 10.34% return on investment over 90 days.

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

Overactive Media Corp  vs.  Libero Copper Corp

Overactive Media Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Overactive Media Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable basic indicators, Overactive Media is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Libero Copper Corp

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Libero Copper Corp are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Libero Copper showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Overactive Media and Libero Copper

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

The idea behind Overactive Media Corp and Libero Copper Corp 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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.