Correlation Between AcadeMedia and Arctic Paper

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

By analyzing existing cross correlation between AcadeMedia AB and Arctic Paper SA, you can compare the effects of market volatilities on AcadeMedia and Arctic Paper 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 AcadeMedia with a short position of Arctic Paper. Check out your portfolio center. Please also check ongoing floating volatility patterns of AcadeMedia and Arctic Paper.

Diversification Opportunities for AcadeMedia and Arctic Paper

-0.23

Correlation Coefficient

AcadeMedia  Arctic Paper

Very good diversification

The 3 months correlation between AcadeMedia and Arctic is -0.23. Overlapping area represents the amount of risk that can be diversified away by holding AcadeMedia AB and Arctic Paper SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Arctic Paper SA and AcadeMedia 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 AcadeMedia AB are associated (or correlated) with Arctic Paper. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Arctic Paper SA has no effect on the direction of AcadeMedia i.e., AcadeMedia and Arctic Paper go up and down completely randomly.

Pair Corralation between AcadeMedia and Arctic Paper

Assuming the 90 days trading horizon AcadeMedia AB is expected to generate 0.91 times more return on investment than Arctic Paper. However, AcadeMedia AB is 1.1 times less risky than Arctic Paper. It trades about 0.31 of its potential returns per unit of risk. Arctic Paper SA is currently generating about -0.03 per unit of risk. If you would invest  5,960  in AcadeMedia AB on November 29, 2024 and sell it today you would earn a total of  1,890  from holding AcadeMedia AB or generate 31.71% return on investment over 90 days.

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

AcadeMedia AB  vs.  Arctic Paper SA

AcadeMedia AB

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in AcadeMedia AB are ranked lower than 24 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, AcadeMedia unveiled solid returns over the last few months and may actually be approaching a breakup point.

Arctic Paper SA

Risk-Adjusted Performance

Very Weak

Over the last 90 days Arctic Paper SA has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Arctic Paper is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with AcadeMedia and Arctic Paper

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

The idea behind AcadeMedia AB and Arctic Paper SA 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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.