Correlation Between Focus Home and Media

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

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

Diversification Opportunities for Focus Home and Media

-0.37

Correlation Coefficient

Focus Home  Media

Very good diversification

The 3 months correlation between Focus and Media is -0.37. Overlapping area represents the amount of risk that can be diversified away by holding Focus Home Interactive and Media and Games in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Media and Games and Focus Home 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 Focus Home Interactive are associated (or correlated) with Media. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Media and Games has no effect on the direction of Focus Home i.e., Focus Home and Media go up and down completely randomly.

Pair Corralation between Focus Home and Media

Assuming the 90 days horizon Focus Home Interactive is expected to under-perform the Media. In addition to that, Focus Home is 1.14 times more volatile than Media and Games. It trades about -0.01 of its total potential returns per unit of risk. Media and Games is currently generating about 0.05 per unit of volatility. If you would invest  175.00  in Media and Games on October 4, 2024 and sell it today you would earn a total of  145.00  from holding Media and Games or generate 82.86% return on investment over 90 days.

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

Focus Home Interactive  vs.  Media and Games

Focus Home Interactive

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Focus Home Interactive are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Focus Home may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Media and Games

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Media and Games has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable technical and fundamental indicators, Media 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 Focus Home and Media

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

The idea behind Focus Home Interactive and Media and Games 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 Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.