Correlation Between GlobalData PLC and Centaur Media

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

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

Diversification Opportunities for GlobalData PLC and Centaur Media

0.21

Correlation Coefficient

GlobalData PLC  Centaur Media

Modest diversification

The 3 months correlation between GlobalData and Centaur is 0.21. Overlapping area represents the amount of risk that can be diversified away by holding GlobalData PLC and Centaur Media in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Centaur Media and GlobalData 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 GlobalData PLC are associated (or correlated) with Centaur Media. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Centaur Media has no effect on the direction of GlobalData PLC i.e., GlobalData PLC and Centaur Media go up and down completely randomly.

Pair Corralation between GlobalData PLC and Centaur Media

Assuming the 90 days trading horizon GlobalData PLC is expected to generate 1.41 times more return on investment than Centaur Media. However, GlobalData PLC is 1.41 times more volatile than Centaur Media. It trades about 0.25 of its potential returns per unit of risk. Centaur Media is currently generating about 0.2 per unit of risk. If you would invest  19,000  in GlobalData PLC on October 11, 2024 and sell it today you would earn a total of  1,500  from holding GlobalData PLC or generate 7.89% return on investment over 90 days.

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

GlobalData PLC  vs.  Centaur Media

GlobalData PLC

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in GlobalData PLC are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, GlobalData PLC is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Centaur Media

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Centaur Media has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound technical and fundamental indicators, Centaur Media is not utilizing all of its potentials. The newest stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with GlobalData PLC and Centaur Media

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

The idea behind GlobalData PLC and Centaur Media 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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..