Correlation Between OOhMedia and Aristocrat Leisure

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Can any of the company-specific risk be diversified away by investing in both OOhMedia and Aristocrat Leisure 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 Aristocrat Leisure into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between oOhMedia and Aristocrat Leisure, you can compare the effects of market volatilities on OOhMedia and Aristocrat Leisure 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 Aristocrat Leisure. Check out your portfolio center. Please also check ongoing floating volatility patterns of OOhMedia and Aristocrat Leisure.

Diversification Opportunities for OOhMedia and Aristocrat Leisure

-0.45
  Correlation Coefficient

Very good diversification

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

Pair Corralation between OOhMedia and Aristocrat Leisure

Assuming the 90 days trading horizon oOhMedia is expected to under-perform the Aristocrat Leisure. In addition to that, OOhMedia is 1.16 times more volatile than Aristocrat Leisure. It trades about -0.1 of its total potential returns per unit of risk. Aristocrat Leisure is currently generating about 0.22 per unit of volatility. If you would invest  5,667  in Aristocrat Leisure on September 21, 2024 and sell it today you would earn a total of  1,168  from holding Aristocrat Leisure or generate 20.61% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthVery Weak
Accuracy100.0%
ValuesDaily Returns

oOhMedia  vs.  Aristocrat Leisure

 Performance 
       Timeline  
oOhMedia 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days oOhMedia has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest uncertain performance, the Stock's essential indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.
Aristocrat Leisure 

Risk-Adjusted Performance

17 of 100

 
Weak
 
Strong
Solid
Compared to the overall equity markets, risk-adjusted returns on investments in Aristocrat Leisure are ranked lower than 17 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain essential indicators, Aristocrat Leisure unveiled solid returns over the last few months and may actually be approaching a breakup point.

OOhMedia and Aristocrat Leisure Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with OOhMedia and Aristocrat Leisure

The main advantage of trading using opposite OOhMedia and Aristocrat Leisure positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if OOhMedia position performs unexpectedly, Aristocrat Leisure 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 Aristocrat Leisure will offset losses from the drop in Aristocrat Leisure's long position.
The idea behind oOhMedia and Aristocrat Leisure 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 Portfolio Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.

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