Correlation Between Nasmedia and MediaZen

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

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

Diversification Opportunities for Nasmedia and MediaZen

0.01

Correlation Coefficient

Nasmedia  MediaZen

Significant diversification

The 3 months correlation between Nasmedia and MediaZen is 0.01. Overlapping area represents the amount of risk that can be diversified away by holding Nasmedia Co and MediaZen in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MediaZen and Nasmedia 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 Nasmedia Co are associated (or correlated) with MediaZen. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MediaZen has no effect on the direction of Nasmedia i.e., Nasmedia and MediaZen go up and down completely randomly.

Pair Corralation between Nasmedia and MediaZen

Assuming the 90 days trading horizon Nasmedia Co is expected to under-perform the MediaZen. But the stock apears to be less risky and, when comparing its historical volatility, Nasmedia Co is 1.4 times less risky than MediaZen. The stock trades about -0.14 of its potential returns per unit of risk. The MediaZen is currently generating about 0.0 of returns per unit of risk over similar time horizon. If you would invest  1,137,000  in MediaZen on September 2, 2024 and sell it today you would lose (7,000) from holding MediaZen or give up 0.62% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	98.33%
Values	Daily Returns

Nasmedia Co  vs.  MediaZen

Nasmedia

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Nasmedia Co has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

MediaZen

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Nasmedia and MediaZen

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

The idea behind Nasmedia Co and MediaZen 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 Dashboard module to portfolio dashboard that provides centralized access to all your investments.