Correlation Between Carnival Plc and Media

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

By analyzing existing cross correlation between Carnival plc and Media and Games, you can compare the effects of market volatilities on Carnival Plc and Media 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 Carnival Plc with a short position of Media. Check out your portfolio center. Please also check ongoing floating volatility patterns of Carnival Plc and Media.

Diversification Opportunities for Carnival Plc and Media

0.52

Correlation Coefficient

Carnival Plc  Media

Very weak diversification

The 3 months correlation between Carnival and Media is 0.52. Overlapping area represents the amount of risk that can be diversified away by holding Carnival plc and Media and Games in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Media and Games and Carnival Plc 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 Carnival plc are associated (or correlated) with Media. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Media and Games has no effect on the direction of Carnival Plc i.e., Carnival Plc and Media go up and down completely randomly.

Pair Corralation between Carnival Plc and Media

Assuming the 90 days trading horizon Carnival plc is expected to generate 0.73 times more return on investment than Media. However, Carnival plc is 1.37 times less risky than Media. It trades about 0.28 of its potential returns per unit of risk. Media and Games is currently generating about 0.02 per unit of risk. If you would invest  1,601  in Carnival plc on September 15, 2024 and sell it today you would earn a total of  901.00  from holding Carnival plc or generate 56.28% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	98.48%
Values	Daily Returns

Carnival plc  vs.  Media and Games

Carnival plc

Risk-Adjusted Performance

22 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Carnival plc are ranked lower than 22 (%) of all global equities and portfolios over the last 90 days. Despite nearly uncertain fundamental indicators, Carnival Plc reported solid returns over the last few months and may actually be approaching a breakup point.

Media and Games

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Media and Games are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable technical and fundamental indicators, Media 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 Carnival Plc and Media

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

The idea behind Carnival plc and Media and Games 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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.