Correlation Between Fair Oaks and MediaZest Plc

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

By analyzing existing cross correlation between Fair Oaks Income and MediaZest plc, you can compare the effects of market volatilities on Fair Oaks and MediaZest Plc 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 Fair Oaks with a short position of MediaZest Plc. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fair Oaks and MediaZest Plc.

Diversification Opportunities for Fair Oaks and MediaZest Plc

0.17

Correlation Coefficient

Fair Oaks  MediaZest Plc

Average diversification

The 3 months correlation between Fair and MediaZest is 0.17. Overlapping area represents the amount of risk that can be diversified away by holding Fair Oaks Income and MediaZest plc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MediaZest plc and Fair Oaks 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 Fair Oaks Income are associated (or correlated) with MediaZest Plc. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MediaZest plc has no effect on the direction of Fair Oaks i.e., Fair Oaks and MediaZest Plc go up and down completely randomly.

Pair Corralation between Fair Oaks and MediaZest Plc

Assuming the 90 days trading horizon Fair Oaks is expected to generate 3.92 times less return on investment than MediaZest Plc. But when comparing it to its historical volatility, Fair Oaks Income is 7.9 times less risky than MediaZest Plc. It trades about 0.13 of its potential returns per unit of risk. MediaZest plc is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest  7.00  in MediaZest plc on October 4, 2024 and sell it today you would earn a total of  0.75  from holding MediaZest plc or generate 10.71% return on investment over 90 days.

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

Fair Oaks Income  vs.  MediaZest plc

Fair Oaks Income

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Fair Oaks Income are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, Fair Oaks is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

MediaZest plc

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in MediaZest plc are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of rather uncertain technical and fundamental indicators, MediaZest Plc exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Fair Oaks and MediaZest Plc

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

The idea behind Fair Oaks Income and MediaZest 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.

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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.