Correlation Between Sogeclair and Netmedia Group

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

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

Diversification Opportunities for Sogeclair and Netmedia Group

0.78

Correlation Coefficient

Sogeclair  Netmedia Group

Poor diversification

The 3 months correlation between Sogeclair and Netmedia is 0.78. Overlapping area represents the amount of risk that can be diversified away by holding Sogeclair SA and Netmedia Group SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Netmedia Group SA and Sogeclair 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 Sogeclair SA are associated (or correlated) with Netmedia Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Netmedia Group SA has no effect on the direction of Sogeclair i.e., Sogeclair and Netmedia Group go up and down completely randomly.

Pair Corralation between Sogeclair and Netmedia Group

Assuming the 90 days trading horizon Sogeclair SA is expected to generate 0.63 times more return on investment than Netmedia Group. However, Sogeclair SA is 1.6 times less risky than Netmedia Group. It trades about 0.18 of its potential returns per unit of risk. Netmedia Group SA is currently generating about 0.08 per unit of risk. If you would invest  1,765  in Sogeclair SA on September 14, 2024 and sell it today you would earn a total of  115.00  from holding Sogeclair SA or generate 6.52% return on investment over 90 days.

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

Sogeclair SA  vs.  Netmedia Group SA

Sogeclair SA

Risk-Adjusted Performance

0 of 100

Very Weak

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

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 latest weak performance, the Stock's basic indicators remain invariable and the latest agitation on Wall Street may also be a sign of long-running gains for the enterprise retail investors.

Pair Trading with Sogeclair and Netmedia Group

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

The idea behind Sogeclair SA and Netmedia Group 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.

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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.