Correlation Between Compagnie and Media 6

Can any of the company-specific risk be diversified away by investing in both Compagnie and Media 6 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 Compagnie and Media 6 into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Compagnie du Cambodge and Media 6 SA, you can compare the effects of market volatilities on Compagnie and Media 6 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 Compagnie with a short position of Media 6. Check out your portfolio center. Please also check ongoing floating volatility patterns of Compagnie and Media 6.

Diversification Opportunities for Compagnie and Media 6

-0.42

Correlation Coefficient

Compagnie  Media 6

Very good diversification

The 3 months correlation between Compagnie and Media is -0.42. Overlapping area represents the amount of risk that can be diversified away by holding Compagnie du Cambodge and Media 6 SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Media 6 SA and Compagnie 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 Compagnie du Cambodge are associated (or correlated) with Media 6. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Media 6 SA has no effect on the direction of Compagnie i.e., Compagnie and Media 6 go up and down completely randomly.

Pair Corralation between Compagnie and Media 6

Assuming the 90 days trading horizon Compagnie du Cambodge is expected to generate 81.32 times more return on investment than Media 6. However, Compagnie is 81.32 times more volatile than Media 6 SA. It trades about 0.35 of its potential returns per unit of risk. Media 6 SA is currently generating about 0.03 per unit of risk. If you would invest  7,650  in Compagnie du Cambodge on September 1, 2024 and sell it today you would earn a total of  1,850  from holding Compagnie du Cambodge or generate 24.18% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	96.97%
Values	Daily Returns

Compagnie du Cambodge  vs.  Media 6 SA

Compagnie du Cambodge

Risk-Adjusted Performance

27 of 100

Strong

Compared to the overall equity markets, risk-adjusted returns on investments in Compagnie du Cambodge are ranked lower than 27 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Compagnie sustained solid returns over the last few months and may actually be approaching a breakup point.

Media 6 SA

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Media 6 SA are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak forward indicators, Media 6 may actually be approaching a critical reversion point that can send shares even higher in December 2024.

Pair Trading with Compagnie and Media 6

The main advantage of trading using opposite Compagnie and Media 6 positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Compagnie position performs unexpectedly, Media 6 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 Media 6 will offset losses from the drop in Media 6's long position.

The idea behind Compagnie du Cambodge and Media 6 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 Portfolio Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.