Correlation Between N Citron and DC Media

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

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

Diversification Opportunities for N Citron and DC Media

-0.39

Correlation Coefficient

N Citron  DC Media

Very good diversification

The 3 months correlation between 101400 and 263720 is -0.39. Overlapping area represents the amount of risk that can be diversified away by holding N Citron and DC Media CoLtd in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on DC Media CoLtd and N Citron 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 N Citron 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 CoLtd has no effect on the direction of N Citron i.e., N Citron and DC Media go up and down completely randomly.

Pair Corralation between N Citron and DC Media

Assuming the 90 days trading horizon N Citron is expected to under-perform the DC Media. But the stock apears to be less risky and, when comparing its historical volatility, N Citron is 1.92 times less risky than DC Media. The stock trades about -0.04 of its potential returns per unit of risk. The DC Media CoLtd is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest  2,670,000  in DC Media CoLtd on October 9, 2024 and sell it today you would lose (465,000) from holding DC Media CoLtd or give up 17.42% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	99.79%
Values	Daily Returns

N Citron  vs.  DC Media CoLtd

N Citron

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days N Citron 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.

DC Media CoLtd

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in DC Media CoLtd are ranked lower than 8 (%) 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 N Citron and DC Media

The main advantage of trading using opposite N Citron and DC Media positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if N Citron 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 N Citron and DC Media CoLtd 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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.