Correlation Between Cyber Media and Naga Dhunseri

Can any of the company-specific risk be diversified away by investing in both Cyber Media and Naga Dhunseri 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 Naga Dhunseri 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 Naga Dhunseri Group, you can compare the effects of market volatilities on Cyber Media and Naga Dhunseri 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 Naga Dhunseri. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cyber Media and Naga Dhunseri.

Diversification Opportunities for Cyber Media and Naga Dhunseri

0.51

Correlation Coefficient

Cyber Media  Naga Dhunseri

Very weak diversification

The 3 months correlation between Cyber and Naga is 0.51. Overlapping area represents the amount of risk that can be diversified away by holding Cyber Media Research and Naga Dhunseri Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Naga Dhunseri Group 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 Naga Dhunseri. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Naga Dhunseri Group has no effect on the direction of Cyber Media i.e., Cyber Media and Naga Dhunseri go up and down completely randomly.

Pair Corralation between Cyber Media and Naga Dhunseri

Assuming the 90 days trading horizon Cyber Media Research is expected to under-perform the Naga Dhunseri. In addition to that, Cyber Media is 1.29 times more volatile than Naga Dhunseri Group. It trades about -0.03 of its total potential returns per unit of risk. Naga Dhunseri Group is currently generating about 0.09 per unit of volatility. If you would invest  243,207  in Naga Dhunseri Group on October 9, 2024 and sell it today you would earn a total of  174,793  from holding Naga Dhunseri Group or generate 71.87% return on investment over 90 days.

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

Cyber Media Research  vs.  Naga Dhunseri Group

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.

Naga Dhunseri Group

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Naga Dhunseri Group has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Naga Dhunseri is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Cyber Media and Naga Dhunseri

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

The idea behind Cyber Media Research and Naga Dhunseri Group 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 Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.