Correlation Between Cyber Media and Neogen Chemicals

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

Diversification Opportunities for Cyber Media and Neogen Chemicals

-0.27

Correlation Coefficient

Cyber Media  Neogen Chemicals

Very good diversification

The 3 months correlation between Cyber and Neogen is -0.27. Overlapping area represents the amount of risk that can be diversified away by holding Cyber Media Research and Neogen Chemicals Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Neogen Chemicals 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 Neogen Chemicals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Neogen Chemicals has no effect on the direction of Cyber Media i.e., Cyber Media and Neogen Chemicals go up and down completely randomly.

Pair Corralation between Cyber Media and Neogen Chemicals

Assuming the 90 days trading horizon Cyber Media Research is expected to generate 1.41 times more return on investment than Neogen Chemicals. However, Cyber Media is 1.41 times more volatile than Neogen Chemicals Limited. It trades about 0.04 of its potential returns per unit of risk. Neogen Chemicals Limited is currently generating about 0.06 per unit of risk. If you would invest  10,000  in Cyber Media Research on October 5, 2024 and sell it today you would earn a total of  625.00  from holding Cyber Media Research or generate 6.25% return on investment over 90 days.

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

Cyber Media Research  vs.  Neogen Chemicals Limited

Cyber Media Research

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Cyber Media Research are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of very unsteady basic indicators, Cyber Media may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Neogen Chemicals

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Neogen Chemicals Limited are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite somewhat uncertain technical and fundamental indicators, Neogen Chemicals may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Cyber Media and Neogen Chemicals

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

The idea behind Cyber Media Research and Neogen Chemicals 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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.