Correlation Between CNVISION MEDIA and Federal Agricultural

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

By analyzing existing cross correlation between CNVISION MEDIA and Federal Agricultural Mortgage, you can compare the effects of market volatilities on CNVISION MEDIA and Federal Agricultural 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 CNVISION MEDIA with a short position of Federal Agricultural. Check out your portfolio center. Please also check ongoing floating volatility patterns of CNVISION MEDIA and Federal Agricultural.

Diversification Opportunities for CNVISION MEDIA and Federal Agricultural

0.24

Correlation Coefficient

CNVISION MEDIA  Federal Agricultural

Modest diversification

The 3 months correlation between CNVISION and Federal is 0.24. Overlapping area represents the amount of risk that can be diversified away by holding CNVISION MEDIA and Federal Agricultural Mortgage in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Federal Agricultural and CNVISION MEDIA 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 CNVISION MEDIA are associated (or correlated) with Federal Agricultural. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Federal Agricultural has no effect on the direction of CNVISION MEDIA i.e., CNVISION MEDIA and Federal Agricultural go up and down completely randomly.

Pair Corralation between CNVISION MEDIA and Federal Agricultural

Assuming the 90 days trading horizon CNVISION MEDIA is expected to generate 1.87 times more return on investment than Federal Agricultural. However, CNVISION MEDIA is 1.87 times more volatile than Federal Agricultural Mortgage. It trades about 0.06 of its potential returns per unit of risk. Federal Agricultural Mortgage is currently generating about -0.04 per unit of risk. If you would invest  5.60  in CNVISION MEDIA on December 30, 2024 and sell it today you would earn a total of  0.55  from holding CNVISION MEDIA or generate 9.82% return on investment over 90 days.

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

CNVISION MEDIA  vs.  Federal Agricultural Mortgage

CNVISION MEDIA

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in CNVISION MEDIA are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of rather uncertain basic indicators, CNVISION MEDIA may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Federal Agricultural

Risk-Adjusted Performance

Very Weak

Over the last 90 days Federal Agricultural Mortgage has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Federal Agricultural is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with CNVISION MEDIA and Federal Agricultural

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

The idea behind CNVISION MEDIA and Federal Agricultural Mortgage 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 Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.