Correlation Between Sohu Inc and Omnicom

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

Diversification Opportunities for Sohu Inc and Omnicom

0.52
  Correlation Coefficient

Very weak diversification

The 3 months correlation between Sohu Inc and Omnicom is 0.52. Overlapping area represents the amount of risk that can be diversified away by holding Sohu Inc ADR and Omnicom Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Omnicom Group and Sohu Inc 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 Sohu Inc ADR are associated (or correlated) with Omnicom. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Omnicom Group has no effect on the direction of Sohu Inc i.e., Sohu Inc and Omnicom go up and down completely randomly.

Pair Corralation between Sohu Inc and Omnicom

Given the investment horizon of 90 days Sohu Inc ADR is expected to generate 1.03 times more return on investment than Omnicom. However, Sohu Inc is 1.03 times more volatile than Omnicom Group. It trades about -0.06 of its potential returns per unit of risk. Omnicom Group is currently generating about -0.19 per unit of risk. If you would invest  1,763  in Sohu Inc ADR on June 27, 2022 and sell it today you would lose (49.00)  from holding Sohu Inc ADR or give up 2.78% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthWeak
Accuracy95.45%
ValuesDaily Returns

Sohu Inc ADR  vs.  Omnicom Group

 Performance (%) 
       Timeline  
Sohu Inc ADR 
Sohu Inc Performance
3 of 100
Compared to the overall equity markets, risk-adjusted returns on investments in Sohu Inc ADR are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak technical indicators, Sohu Inc may actually be approaching a critical reversion point that can send shares even higher in October 2022.

Sohu Inc Price Channel

Omnicom Group 
Omnicom Performance
0 of 100
Over the last 90 days Omnicom Group has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong primary indicators, Omnicom is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Omnicom Price Channel

Sohu Inc and Omnicom Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Sohu Inc and Omnicom

The main advantage of trading using opposite Sohu Inc and Omnicom positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sohu Inc position performs unexpectedly, Omnicom 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 Omnicom will offset losses from the drop in Omnicom's long position.
Sohu Inc vs. Industrias Bachoco SA
The idea behind Sohu Inc ADR and Omnicom Group 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.
Omnicom vs. BUSHVELD MINERALS LTD
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 Transaction History module to view history of all your transactions and understand their impact on performance.

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