Correlation Between AcadeMedia and Maven Wireless

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

By analyzing existing cross correlation between AcadeMedia AB and Maven Wireless Sweden, you can compare the effects of market volatilities on AcadeMedia and Maven Wireless 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 Maven Wireless. Check out your portfolio center. Please also check ongoing floating volatility patterns of AcadeMedia and Maven Wireless.

Diversification Opportunities for AcadeMedia and Maven Wireless

0.55

Correlation Coefficient

AcadeMedia  Maven Wireless

Very weak diversification

The 3 months correlation between AcadeMedia and Maven is 0.55. Overlapping area represents the amount of risk that can be diversified away by holding AcadeMedia AB and Maven Wireless Sweden in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Maven Wireless Sweden 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 Maven Wireless. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Maven Wireless Sweden has no effect on the direction of AcadeMedia i.e., AcadeMedia and Maven Wireless go up and down completely randomly.

Pair Corralation between AcadeMedia and Maven Wireless

Assuming the 90 days trading horizon AcadeMedia AB is expected to generate 0.4 times more return on investment than Maven Wireless. However, AcadeMedia AB is 2.48 times less risky than Maven Wireless. It trades about -0.08 of its potential returns per unit of risk. Maven Wireless Sweden is currently generating about -0.07 per unit of risk. If you would invest  6,392  in AcadeMedia AB on September 3, 2024 and sell it today you would lose (432.00) from holding AcadeMedia AB or give up 6.76% of portfolio value over 90 days.

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

AcadeMedia AB  vs.  Maven Wireless Sweden

AcadeMedia AB

Risk-Adjusted Performance

0 of 100

Very Weak

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

Maven Wireless Sweden

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Maven Wireless Sweden has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in January 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Pair Trading with AcadeMedia and Maven Wireless

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

The idea behind AcadeMedia AB and Maven Wireless Sweden 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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.