Correlation Between MEDIANA CoLtd and DC Media

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

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

Diversification Opportunities for MEDIANA CoLtd and DC Media

0.36

Correlation Coefficient

MEDIANA CoLtd  DC Media

Weak diversification

The 3 months correlation between MEDIANA and 263720 is 0.36. Overlapping area represents the amount of risk that can be diversified away by holding MEDIANA CoLtd and DC Media Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on DC Media and MEDIANA CoLtd 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 MEDIANA CoLtd are associated (or correlated) with DC Media. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of DC Media has no effect on the direction of MEDIANA CoLtd i.e., MEDIANA CoLtd and DC Media go up and down completely randomly.

Pair Corralation between MEDIANA CoLtd and DC Media

Assuming the 90 days trading horizon MEDIANA CoLtd is expected to generate 1.12 times more return on investment than DC Media. However, MEDIANA CoLtd is 1.12 times more volatile than DC Media Co. It trades about 0.2 of its potential returns per unit of risk. DC Media Co is currently generating about 0.19 per unit of risk. If you would invest  460,000  in MEDIANA CoLtd on December 3, 2024 and sell it today you would earn a total of  28,000  from holding MEDIANA CoLtd or generate 6.09% return on investment over 90 days.

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

MEDIANA CoLtd  vs.  DC Media Co

MEDIANA CoLtd

Risk-Adjusted Performance

Very Weak

Over the last 90 days MEDIANA CoLtd has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, MEDIANA CoLtd is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

DC Media

Risk-Adjusted Performance

Very Weak

Over the last 90 days DC Media Co has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, DC Media is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with MEDIANA CoLtd and DC Media

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

The idea behind MEDIANA CoLtd and DC Media Co 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.