Correlation Between Wam Leaders and OOhMedia

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

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

Diversification Opportunities for Wam Leaders and OOhMedia

0.02

Correlation Coefficient

Wam Leaders  OOhMedia

Significant diversification

The 3 months correlation between Wam and OOhMedia is 0.02. Overlapping area represents the amount of risk that can be diversified away by holding Wam Leaders and oOhMedia in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on oOhMedia and Wam Leaders 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 Wam Leaders 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 Wam Leaders i.e., Wam Leaders and OOhMedia go up and down completely randomly.

Pair Corralation between Wam Leaders and OOhMedia

Assuming the 90 days trading horizon Wam Leaders is expected to generate 2.85 times less return on investment than OOhMedia. But when comparing it to its historical volatility, Wam Leaders is 1.61 times less risky than OOhMedia. It trades about 0.02 of its potential returns per unit of risk. oOhMedia is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest  125.00  in oOhMedia on September 4, 2024 and sell it today you would earn a total of  3.00  from holding oOhMedia or generate 2.4% return on investment over 90 days.

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

Wam Leaders  vs.  oOhMedia

Wam Leaders

Risk-Adjusted Performance

1 of 100

Very Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Wam Leaders are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable technical and fundamental indicators, Wam Leaders is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

oOhMedia

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in oOhMedia are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable essential indicators, OOhMedia is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Wam Leaders and OOhMedia

The main advantage of trading using opposite Wam Leaders and OOhMedia positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Wam Leaders 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 Wam Leaders 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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.