Correlation Between DJ Mediaprint and Paramount Communications

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

By analyzing existing cross correlation between DJ Mediaprint Logistics and Paramount Communications Limited, you can compare the effects of market volatilities on DJ Mediaprint and Paramount Communications 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 DJ Mediaprint with a short position of Paramount Communications. Check out your portfolio center. Please also check ongoing floating volatility patterns of DJ Mediaprint and Paramount Communications.

Diversification Opportunities for DJ Mediaprint and Paramount Communications

0.94

Correlation Coefficient

DJ Mediaprint  Paramount Communications

Almost no diversification

The 3 months correlation between DJML and Paramount is 0.94. Overlapping area represents the amount of risk that can be diversified away by holding DJ Mediaprint Logistics and Paramount Communications Limit in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Paramount Communications and DJ Mediaprint 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 DJ Mediaprint Logistics are associated (or correlated) with Paramount Communications. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Paramount Communications has no effect on the direction of DJ Mediaprint i.e., DJ Mediaprint and Paramount Communications go up and down completely randomly.

Pair Corralation between DJ Mediaprint and Paramount Communications

Assuming the 90 days trading horizon DJ Mediaprint Logistics is expected to generate 0.76 times more return on investment than Paramount Communications. However, DJ Mediaprint Logistics is 1.31 times less risky than Paramount Communications. It trades about -0.18 of its potential returns per unit of risk. Paramount Communications Limited is currently generating about -0.19 per unit of risk. If you would invest  16,970  in DJ Mediaprint Logistics on December 27, 2024 and sell it today you would lose (4,975) from holding DJ Mediaprint Logistics or give up 29.32% of portfolio value over 90 days.

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

DJ Mediaprint Logistics  vs.  Paramount Communications Limit

DJ Mediaprint Logistics

Risk-Adjusted Performance

Very Weak

Over the last 90 days DJ Mediaprint Logistics has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in April 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Paramount Communications

Risk-Adjusted Performance

Very Weak

Over the last 90 days Paramount Communications Limited has generated negative risk-adjusted returns adding no value to investors with long positions. Despite uncertain performance in the last few months, the Stock's essential indicators remain somewhat strong which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with DJ Mediaprint and Paramount Communications

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

The idea behind DJ Mediaprint Logistics and Paramount Communications 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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.