Correlation Between Guaranty Trust and MediaZest Plc

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

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

Diversification Opportunities for Guaranty Trust and MediaZest Plc

0.31

Correlation Coefficient

Guaranty Trust  MediaZest Plc

Weak diversification

The 3 months correlation between Guaranty and MediaZest is 0.31. Overlapping area represents the amount of risk that can be diversified away by holding Guaranty Trust Holding and MediaZest plc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MediaZest plc and Guaranty Trust 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 Guaranty Trust Holding 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 Guaranty Trust i.e., Guaranty Trust and MediaZest Plc go up and down completely randomly.

Pair Corralation between Guaranty Trust and MediaZest Plc

Assuming the 90 days trading horizon Guaranty Trust is expected to generate 3.18 times less return on investment than MediaZest Plc. But when comparing it to its historical volatility, Guaranty Trust Holding is 1.17 times less risky than MediaZest Plc. It trades about 0.01 of its potential returns per unit of risk. MediaZest plc is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest  6.30  in MediaZest plc on October 23, 2024 and sell it today you would earn a total of  1.95  from holding MediaZest plc or generate 30.95% return on investment over 90 days.

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

Guaranty Trust Holding  vs.  MediaZest plc

Guaranty Trust Holding

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Guaranty Trust Holding are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite quite uncertain essential indicators, Guaranty Trust disclosed solid returns over the last few months and may actually be approaching a breakup point.

MediaZest plc

Risk-Adjusted Performance

3 of 100

Insignificant

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

Pair Trading with Guaranty Trust and MediaZest Plc

The main advantage of trading using opposite Guaranty Trust and MediaZest Plc positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Guaranty Trust 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 Guaranty Trust Holding 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.

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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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .