Correlation Between Philip Morris and CNVISION MEDIA

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

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

Diversification Opportunities for Philip Morris and CNVISION MEDIA

-0.45

Correlation Coefficient

Philip Morris  CNVISION MEDIA

Very good diversification

The 3 months correlation between Philip and CNVISION is -0.45. Overlapping area represents the amount of risk that can be diversified away by holding Philip Morris International and CNVISION MEDIA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CNVISION MEDIA and Philip Morris 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 Philip Morris International are associated (or correlated) with CNVISION MEDIA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CNVISION MEDIA has no effect on the direction of Philip Morris i.e., Philip Morris and CNVISION MEDIA go up and down completely randomly.

Pair Corralation between Philip Morris and CNVISION MEDIA

Assuming the 90 days trading horizon Philip Morris is expected to generate 11.41 times less return on investment than CNVISION MEDIA. But when comparing it to its historical volatility, Philip Morris International is 2.13 times less risky than CNVISION MEDIA. It trades about 0.01 of its potential returns per unit of risk. CNVISION MEDIA is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest  5.35  in CNVISION MEDIA on October 26, 2024 and sell it today you would earn a total of  0.55  from holding CNVISION MEDIA or generate 10.28% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	98.33%
Values	Daily Returns

Philip Morris International  vs.  CNVISION MEDIA

Philip Morris Intern

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Philip Morris International are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, Philip Morris is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

CNVISION MEDIA

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in CNVISION MEDIA are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of rather uncertain basic indicators, CNVISION MEDIA may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Philip Morris and CNVISION MEDIA

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

The idea behind Philip Morris International and CNVISION MEDIA 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 Center module to all portfolio management and optimization tools to improve performance of your portfolios.