Correlation Between Cyber Media and Golden Tobacco

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

By analyzing existing cross correlation between Cyber Media Research and Golden Tobacco Limited, you can compare the effects of market volatilities on Cyber Media and Golden Tobacco 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 Cyber Media with a short position of Golden Tobacco. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cyber Media and Golden Tobacco.

Diversification Opportunities for Cyber Media and Golden Tobacco

-0.3

Correlation Coefficient

Cyber Media  Golden Tobacco

Very good diversification

The 3 months correlation between Cyber and Golden is -0.3. Overlapping area represents the amount of risk that can be diversified away by holding Cyber Media Research and Golden Tobacco Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Golden Tobacco and Cyber 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 Cyber Media Research are associated (or correlated) with Golden Tobacco. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Golden Tobacco has no effect on the direction of Cyber Media i.e., Cyber Media and Golden Tobacco go up and down completely randomly.

Pair Corralation between Cyber Media and Golden Tobacco

Assuming the 90 days trading horizon Cyber Media Research is expected to generate 1.7 times more return on investment than Golden Tobacco. However, Cyber Media is 1.7 times more volatile than Golden Tobacco Limited. It trades about 0.02 of its potential returns per unit of risk. Golden Tobacco Limited is currently generating about -0.04 per unit of risk. If you would invest  10,100  in Cyber Media Research on October 9, 2024 and sell it today you would lose (5.00) from holding Cyber Media Research or give up 0.05% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.39%
Values	Daily Returns

Cyber Media Research  vs.  Golden Tobacco Limited

Cyber Media Research

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Cyber Media Research are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy basic indicators, Cyber Media is not utilizing all of its potentials. The latest stock price disarray, may contribute to short-term losses for the investors.

Golden Tobacco

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Golden Tobacco Limited has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unsteady performance, the Stock's basic indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Pair Trading with Cyber Media and Golden Tobacco

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

The idea behind Cyber Media Research and Golden Tobacco 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 Global Correlations module to find global opportunities by holding instruments from different markets.