Correlation Between CyberAgent and Tremor International

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Can any of the company-specific risk be diversified away by investing in both CyberAgent and Tremor International 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 Tremor International into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between CyberAgent ADR and Tremor International, you can compare the effects of market volatilities on CyberAgent and Tremor International 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 Tremor International. Check out your portfolio center. Please also check ongoing floating volatility patterns of CyberAgent and Tremor International.

Diversification Opportunities for CyberAgent and Tremor International

0.37
  Correlation Coefficient

Weak diversification

The 3 months correlation between CyberAgent and Tremor is 0.37. Overlapping area represents the amount of risk that can be diversified away by holding CyberAgent ADR and Tremor International in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tremor International 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 Tremor International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tremor International has no effect on the direction of CyberAgent i.e., CyberAgent and Tremor International go up and down completely randomly.

Pair Corralation between CyberAgent and Tremor International

Assuming the 90 days horizon CyberAgent is expected to generate 8.97 times less return on investment than Tremor International. But when comparing it to its historical volatility, CyberAgent ADR is 6.01 times less risky than Tremor International. It trades about 0.09 of its potential returns per unit of risk. Tremor International is currently generating about 0.14 of returns per unit of risk over similar time horizon. If you would invest  500.00  in Tremor International on December 21, 2024 and sell it today you would earn a total of  215.00  from holding Tremor International or generate 43.0% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthVery Weak
Accuracy98.33%
ValuesDaily Returns

CyberAgent ADR  vs.  Tremor International

 Performance 
       Timeline  
CyberAgent ADR 

Risk-Adjusted Performance

OK

 
Weak
 
Strong
Compared to the overall equity markets, risk-adjusted returns on investments in CyberAgent ADR are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal forward indicators, CyberAgent showed solid returns over the last few months and may actually be approaching a breakup point.
Tremor International 

Risk-Adjusted Performance

Good

 
Weak
 
Strong
Compared to the overall equity markets, risk-adjusted returns on investments in Tremor International are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Despite nearly abnormal basic indicators, Tremor International reported solid returns over the last few months and may actually be approaching a breakup point.

CyberAgent and Tremor International Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with CyberAgent and Tremor International

The main advantage of trading using opposite CyberAgent and Tremor International positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CyberAgent position performs unexpectedly, Tremor International 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 Tremor International will offset losses from the drop in Tremor International's long position.
The idea behind CyberAgent ADR and Tremor International 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.
Check out your portfolio center.
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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.

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