Correlation Between Kaonmedia and DC Media

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

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

Diversification Opportunities for Kaonmedia and DC Media

-0.22

Correlation Coefficient

Kaonmedia  DC Media

Very good diversification

The 3 months correlation between Kaonmedia and 263720 is -0.22. Overlapping area represents the amount of risk that can be diversified away by holding Kaonmedia Co and DC Media Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on DC Media and Kaonmedia 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 Kaonmedia Co 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 Kaonmedia i.e., Kaonmedia and DC Media go up and down completely randomly.

Pair Corralation between Kaonmedia and DC Media

Assuming the 90 days trading horizon Kaonmedia Co is expected to under-perform the DC Media. In addition to that, Kaonmedia is 1.01 times more volatile than DC Media Co. It trades about -0.13 of its total potential returns per unit of risk. DC Media Co is currently generating about 0.09 per unit of volatility. If you would invest  1,733,000  in DC Media Co on September 4, 2024 and sell it today you would earn a total of  208,000  from holding DC Media Co or generate 12.0% return on investment over 90 days.

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

Kaonmedia Co  vs.  DC Media Co

Kaonmedia

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Kaonmedia Co has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain somewhat strong which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

DC Media

Risk-Adjusted Performance

6 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in DC Media Co are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, DC Media sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Kaonmedia and DC Media

The main advantage of trading using opposite Kaonmedia and DC Media positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Kaonmedia 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 Kaonmedia Co 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.

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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.