Correlation Between ARN Media and Iodm

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

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

Diversification Opportunities for ARN Media and Iodm

-0.12

Correlation Coefficient

ARN Media  Iodm

Good diversification

The 3 months correlation between ARN and Iodm is -0.12. Overlapping area represents the amount of risk that can be diversified away by holding ARN Media Limited and Iodm in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Iodm and ARN 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 ARN Media Limited are associated (or correlated) with Iodm. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Iodm has no effect on the direction of ARN Media i.e., ARN Media and Iodm go up and down completely randomly.

Pair Corralation between ARN Media and Iodm

Assuming the 90 days trading horizon ARN Media Limited is expected to under-perform the Iodm. But the stock apears to be less risky and, when comparing its historical volatility, ARN Media Limited is 2.27 times less risky than Iodm. The stock trades about -0.1 of its potential returns per unit of risk. The Iodm is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest  17.00  in Iodm on December 27, 2024 and sell it today you would earn a total of  2.00  from holding Iodm or generate 11.76% return on investment over 90 days.

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

ARN Media Limited  vs.  Iodm

ARN Media Limited

Risk-Adjusted Performance

Very Weak

Over the last 90 days ARN Media Limited 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.

Iodm

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Iodm are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain fundamental indicators, Iodm unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with ARN Media and Iodm

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

The idea behind ARN Media Limited and Iodm 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.

Check out your portfolio center.

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 Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.