Correlation Between CyberAgent and Mirriad Advertising

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

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

Diversification Opportunities for CyberAgent and Mirriad Advertising

0.86

Correlation Coefficient

CyberAgent  Mirriad Advertising

Very poor diversification

The 3 months correlation between CyberAgent and Mirriad is 0.86. Overlapping area represents the amount of risk that can be diversified away by holding CyberAgent ADR and Mirriad Advertising plc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mirriad Advertising plc and CyberAgent 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 CyberAgent ADR are associated (or correlated) with Mirriad Advertising. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mirriad Advertising plc has no effect on the direction of CyberAgent i.e., CyberAgent and Mirriad Advertising go up and down completely randomly.

Pair Corralation between CyberAgent and Mirriad Advertising

Assuming the 90 days horizon CyberAgent ADR is expected to generate 0.32 times more return on investment than Mirriad Advertising. However, CyberAgent ADR is 3.16 times less risky than Mirriad Advertising. It trades about -0.06 of its potential returns per unit of risk. Mirriad Advertising plc is currently generating about -0.17 per unit of risk. If you would invest  344.00  in CyberAgent ADR on October 24, 2024 and sell it today you would lose (29.00) from holding CyberAgent ADR or give up 8.43% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	93.65%
Values	Daily Returns

CyberAgent ADR  vs.  Mirriad Advertising plc

CyberAgent ADR

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days CyberAgent ADR has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest abnormal performance, the Stock's forward indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Mirriad Advertising plc

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Mirriad Advertising plc has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fragile performance in the last few months, the Stock's fundamental indicators remain nearly stable which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Pair Trading with CyberAgent and Mirriad Advertising

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

The idea behind CyberAgent ADR and Mirriad Advertising plc 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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..