Correlation Between Diamond Estates and International Media

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

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

Diversification Opportunities for Diamond Estates and International Media

0.0

Correlation Coefficient

Diamond Estates  International Media

Pay attention - limited upside

The 3 months correlation between Diamond and International is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Diamond Estates Wines and International Media Acquisitio in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on International Media and Diamond Estates 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 Diamond Estates Wines are associated (or correlated) with International Media. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of International Media has no effect on the direction of Diamond Estates i.e., Diamond Estates and International Media go up and down completely randomly.

Pair Corralation between Diamond Estates and International Media

Assuming the 90 days horizon Diamond Estates is expected to generate 4.4 times less return on investment than International Media. But when comparing it to its historical volatility, Diamond Estates Wines is 2.0 times less risky than International Media. It trades about 0.03 of its potential returns per unit of risk. International Media Acquisition is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest  1,015  in International Media Acquisition on October 9, 2024 and sell it today you would earn a total of  185.00  from holding International Media Acquisition or generate 18.23% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	58.63%
Values	Daily Returns

Diamond Estates Wines  vs.  International Media Acquisitio

Diamond Estates Wines

Risk-Adjusted Performance

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Very Weak

Over the last 90 days Diamond Estates Wines has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable technical and fundamental indicators, Diamond Estates is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

International Media

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days International Media Acquisition has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, International Media is not utilizing all of its potentials. The latest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Diamond Estates and International Media

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

The idea behind Diamond Estates Wines and International Media Acquisition 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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.