Correlation Between Inly Media and Qingdao Citymedia

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

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

Diversification Opportunities for Inly Media and Qingdao Citymedia

0.83

Correlation Coefficient

Inly Media  Qingdao Citymedia

Very poor diversification

The 3 months correlation between Inly and Qingdao is 0.83. Overlapping area represents the amount of risk that can be diversified away by holding Inly Media Co and Qingdao Citymedia Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Qingdao Citymedia and Inly Media 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 Inly Media Co are associated (or correlated) with Qingdao Citymedia. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Qingdao Citymedia has no effect on the direction of Inly Media i.e., Inly Media and Qingdao Citymedia go up and down completely randomly.

Pair Corralation between Inly Media and Qingdao Citymedia

Assuming the 90 days trading horizon Inly Media Co is expected to generate 2.17 times more return on investment than Qingdao Citymedia. However, Inly Media is 2.17 times more volatile than Qingdao Citymedia Co. It trades about 0.15 of its potential returns per unit of risk. Qingdao Citymedia Co is currently generating about -0.01 per unit of risk. If you would invest  1,504  in Inly Media Co on September 24, 2024 and sell it today you would earn a total of  272.00  from holding Inly Media Co or generate 18.09% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	95.45%
Values	Daily Returns

Inly Media Co  vs.  Qingdao Citymedia Co

Inly Media

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Inly Media Co are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Inly Media sustained solid returns over the last few months and may actually be approaching a breakup point.

Qingdao Citymedia

Risk-Adjusted Performance

5 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Qingdao Citymedia Co are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Qingdao Citymedia may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Inly Media and Qingdao Citymedia

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

The idea behind Inly Media Co and Qingdao Citymedia 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 Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.