Correlation Between PI Advanced and Nasmedia

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

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

Diversification Opportunities for PI Advanced and Nasmedia

-0.13

Correlation Coefficient

PI Advanced  Nasmedia

Good diversification

The 3 months correlation between 178920 and Nasmedia is -0.13. Overlapping area represents the amount of risk that can be diversified away by holding PI Advanced Materials and Nasmedia Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nasmedia and PI Advanced 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 PI Advanced Materials are associated (or correlated) with Nasmedia. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nasmedia has no effect on the direction of PI Advanced i.e., PI Advanced and Nasmedia go up and down completely randomly.

Pair Corralation between PI Advanced and Nasmedia

Assuming the 90 days trading horizon PI Advanced Materials is expected to generate 2.79 times more return on investment than Nasmedia. However, PI Advanced is 2.79 times more volatile than Nasmedia Co. It trades about 0.04 of its potential returns per unit of risk. Nasmedia Co is currently generating about 0.01 per unit of risk. If you would invest  1,694,000  in PI Advanced Materials on December 26, 2024 and sell it today you would earn a total of  66,000  from holding PI Advanced Materials or generate 3.9% return on investment over 90 days.

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

PI Advanced Materials  vs.  Nasmedia Co

PI Advanced Materials

Risk-Adjusted Performance

Weak

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

Nasmedia

Risk-Adjusted Performance

Very Weak

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

Pair Trading with PI Advanced and Nasmedia

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

The idea behind PI Advanced Materials and Nasmedia 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.

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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 Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.