Correlation Between Netmedia Group and Lexibook Linguistic

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

By analyzing existing cross correlation between Netmedia Group SA and Lexibook Linguistic Electronic, you can compare the effects of market volatilities on Netmedia Group and Lexibook Linguistic 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 Netmedia Group with a short position of Lexibook Linguistic. Check out your portfolio center. Please also check ongoing floating volatility patterns of Netmedia Group and Lexibook Linguistic.

Diversification Opportunities for Netmedia Group and Lexibook Linguistic

-0.6

Correlation Coefficient

Netmedia Group  Lexibook Linguistic

Excellent diversification

The 3 months correlation between Netmedia and Lexibook is -0.6. Overlapping area represents the amount of risk that can be diversified away by holding Netmedia Group SA and Lexibook Linguistic Electronic in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lexibook Linguistic and Netmedia Group 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 Netmedia Group SA are associated (or correlated) with Lexibook Linguistic. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lexibook Linguistic has no effect on the direction of Netmedia Group i.e., Netmedia Group and Lexibook Linguistic go up and down completely randomly.

Pair Corralation between Netmedia Group and Lexibook Linguistic

Assuming the 90 days trading horizon Netmedia Group is expected to generate 1.0 times less return on investment than Lexibook Linguistic. In addition to that, Netmedia Group is 11.69 times more volatile than Lexibook Linguistic Electronic. It trades about 0.01 of its total potential returns per unit of risk. Lexibook Linguistic Electronic is currently generating about 0.09 per unit of volatility. If you would invest  392.00  in Lexibook Linguistic Electronic on September 5, 2024 and sell it today you would earn a total of  7.00  from holding Lexibook Linguistic Electronic or generate 1.79% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	98.46%
Values	Daily Returns

Netmedia Group SA  vs.  Lexibook Linguistic Electronic

Netmedia Group SA

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Netmedia Group SA has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable basic indicators, Netmedia Group is not utilizing all of its potentials. The current stock price agitation, may contribute to short-term losses for the retail investors.

Lexibook Linguistic

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Lexibook Linguistic Electronic are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Even with relatively invariable basic indicators, Lexibook Linguistic is not utilizing all of its potentials. The current stock price agitation, may contribute to short-term losses for the retail investors.

Pair Trading with Netmedia Group and Lexibook Linguistic

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

The idea behind Netmedia Group SA and Lexibook Linguistic Electronic 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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.