Correlation Between Fine Organic and Next Mediaworks

Can any of the company-specific risk be diversified away by investing in both Fine Organic and Next Mediaworks 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 Fine Organic and Next Mediaworks into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Fine Organic Industries and Next Mediaworks Limited, you can compare the effects of market volatilities on Fine Organic and Next Mediaworks 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 Fine Organic with a short position of Next Mediaworks. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fine Organic and Next Mediaworks.

Diversification Opportunities for Fine Organic and Next Mediaworks

0.63

Correlation Coefficient

Fine Organic  Next Mediaworks

Poor diversification

The 3 months correlation between Fine and Next is 0.63. Overlapping area represents the amount of risk that can be diversified away by holding Fine Organic Industries and Next Mediaworks Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Next Mediaworks and Fine Organic 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 Fine Organic Industries are associated (or correlated) with Next Mediaworks. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Next Mediaworks has no effect on the direction of Fine Organic i.e., Fine Organic and Next Mediaworks go up and down completely randomly.

Pair Corralation between Fine Organic and Next Mediaworks

Assuming the 90 days trading horizon Fine Organic Industries is expected to under-perform the Next Mediaworks. But the stock apears to be less risky and, when comparing its historical volatility, Fine Organic Industries is 2.11 times less risky than Next Mediaworks. The stock trades about -0.01 of its potential returns per unit of risk. The Next Mediaworks Limited is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest  686.00  in Next Mediaworks Limited on October 25, 2024 and sell it today you would earn a total of  40.00  from holding Next Mediaworks Limited or generate 5.83% return on investment over 90 days.

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

Fine Organic Industries  vs.  Next Mediaworks Limited

Fine Organic Industries

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Fine Organic Industries has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Fine Organic is not utilizing all of its potentials. The recent stock price disturbance, may contribute to mid-run losses for the stockholders.

Next Mediaworks

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Next Mediaworks Limited are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of rather unfluctuating fundamental indicators, Next Mediaworks may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Fine Organic and Next Mediaworks

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

The idea behind Fine Organic Industries and Next Mediaworks 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.

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 Bonds Directory module to find actively traded corporate debentures issued by US companies.