Correlation Between Cholamandalam Investment and Next Mediaworks

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

By analyzing existing cross correlation between Cholamandalam Investment and and Next Mediaworks Limited, you can compare the effects of market volatilities on Cholamandalam Investment and Next Mediaworks 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 Cholamandalam Investment with a short position of Next Mediaworks. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cholamandalam Investment and Next Mediaworks.

Diversification Opportunities for Cholamandalam Investment and Next Mediaworks

-0.45

Correlation Coefficient

Cholamandalam Investment  Next Mediaworks

Very good diversification

The 3 months correlation between Cholamandalam and Next is -0.45. Overlapping area represents the amount of risk that can be diversified away by holding Cholamandalam Investment and and Next Mediaworks Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Next Mediaworks and Cholamandalam Investment 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 Cholamandalam Investment and are associated (or correlated) with Next Mediaworks. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Next Mediaworks has no effect on the direction of Cholamandalam Investment i.e., Cholamandalam Investment and Next Mediaworks go up and down completely randomly.

Pair Corralation between Cholamandalam Investment and Next Mediaworks

Assuming the 90 days trading horizon Cholamandalam Investment and is expected to generate 0.54 times more return on investment than Next Mediaworks. However, Cholamandalam Investment and is 1.85 times less risky than Next Mediaworks. It trades about 0.06 of its potential returns per unit of risk. Next Mediaworks Limited is currently generating about 0.03 per unit of risk. If you would invest  73,103  in Cholamandalam Investment and on September 23, 2024 and sell it today you would earn a total of  45,852  from holding Cholamandalam Investment and or generate 62.72% return on investment over 90 days.

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

Cholamandalam Investment and  vs.  Next Mediaworks Limited

Cholamandalam Investment

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Cholamandalam Investment and has generated negative risk-adjusted returns adding no value to investors with long positions. Despite uncertain performance in the last few months, the Stock's technical and fundamental indicators remain fairly strong which may send shares a bit higher in January 2025. The recent confusion may also be a sign of long-lasting up-swing for the firm traders.

Next Mediaworks

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Next Mediaworks Limited are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of rather weak fundamental indicators, Next Mediaworks exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Cholamandalam Investment and Next Mediaworks

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

The idea behind Cholamandalam Investment and and Next Mediaworks Limited 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.