Correlation Between Aferian Plc and Mediaco Holding

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

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

Diversification Opportunities for Aferian Plc and Mediaco Holding

0.19

Correlation Coefficient

Aferian Plc  Mediaco Holding

Average diversification

The 3 months correlation between Aferian and Mediaco is 0.19. Overlapping area represents the amount of risk that can be diversified away by holding Aferian Plc and Mediaco Holding in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mediaco Holding and Aferian Plc 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 Aferian Plc are associated (or correlated) with Mediaco Holding. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mediaco Holding has no effect on the direction of Aferian Plc i.e., Aferian Plc and Mediaco Holding go up and down completely randomly.

Pair Corralation between Aferian Plc and Mediaco Holding

Assuming the 90 days horizon Aferian Plc is expected to generate 1.68 times less return on investment than Mediaco Holding. But when comparing it to its historical volatility, Aferian Plc is 1.07 times less risky than Mediaco Holding. It trades about 0.04 of its potential returns per unit of risk. Mediaco Holding is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest  106.00  in Mediaco Holding on September 5, 2024 and sell it today you would earn a total of  22.00  from holding Mediaco Holding or generate 20.75% return on investment over 90 days.

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

Aferian Plc  vs.  Mediaco Holding

Aferian Plc

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Aferian Plc has generated negative risk-adjusted returns adding no value to investors with long positions. Despite conflicting performance in the last few months, the Stock's fundamental indicators remain nearly stable which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Mediaco Holding

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Mediaco Holding has generated negative risk-adjusted returns adding no value to investors with long positions. Despite unfluctuating performance in the last few months, the Stock's forward indicators remain somewhat strong which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with Aferian Plc and Mediaco Holding

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

The idea behind Aferian Plc and Mediaco Holding 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 Portfolio Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.