Correlation Between Magnora ASA and XLMedia PLC

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

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

Diversification Opportunities for Magnora ASA and XLMedia PLC

-0.43

Correlation Coefficient

Magnora ASA  XLMedia PLC

Very good diversification

The 3 months correlation between Magnora and XLMedia is -0.43. Overlapping area represents the amount of risk that can be diversified away by holding Magnora ASA and XLMedia PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on XLMedia PLC and Magnora ASA 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 Magnora ASA are associated (or correlated) with XLMedia PLC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of XLMedia PLC has no effect on the direction of Magnora ASA i.e., Magnora ASA and XLMedia PLC go up and down completely randomly.

Pair Corralation between Magnora ASA and XLMedia PLC

Assuming the 90 days trading horizon Magnora ASA is expected to under-perform the XLMedia PLC. In addition to that, Magnora ASA is 1.14 times more volatile than XLMedia PLC. It trades about -0.1 of its total potential returns per unit of risk. XLMedia PLC is currently generating about 0.11 per unit of volatility. If you would invest  914.00  in XLMedia PLC on December 29, 2024 and sell it today you would earn a total of  111.00  from holding XLMedia PLC or generate 12.14% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	98.46%
Values	Daily Returns

Magnora ASA  vs.  XLMedia PLC

Magnora ASA

Risk-Adjusted Performance

Very Weak

Over the last 90 days Magnora ASA has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in April 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

XLMedia PLC

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in XLMedia PLC are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of rather uncertain technical and fundamental indicators, XLMedia PLC may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Magnora ASA and XLMedia PLC

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

The idea behind Magnora ASA and XLMedia PLC 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 Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.