Correlation Between Industrial Investment and DJ Mediaprint

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

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

Diversification Opportunities for Industrial Investment and DJ Mediaprint

0.3

Correlation Coefficient

Industrial Investment  DJ Mediaprint

Weak diversification

The 3 months correlation between Industrial and DJML is 0.3. Overlapping area represents the amount of risk that can be diversified away by holding Industrial Investment Trust and DJ Mediaprint Logistics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on DJ Mediaprint Logistics and Industrial Investment 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 Industrial Investment Trust are associated (or correlated) with DJ Mediaprint. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of DJ Mediaprint Logistics has no effect on the direction of Industrial Investment i.e., Industrial Investment and DJ Mediaprint go up and down completely randomly.

Pair Corralation between Industrial Investment and DJ Mediaprint

Assuming the 90 days trading horizon Industrial Investment Trust is expected to generate 0.82 times more return on investment than DJ Mediaprint. However, Industrial Investment Trust is 1.23 times less risky than DJ Mediaprint. It trades about 0.41 of its potential returns per unit of risk. DJ Mediaprint Logistics is currently generating about 0.16 per unit of risk. If you would invest  25,695  in Industrial Investment Trust on September 4, 2024 and sell it today you would earn a total of  17,010  from holding Industrial Investment Trust or generate 66.2% return on investment over 90 days.

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

Industrial Investment Trust  vs.  DJ Mediaprint Logistics

Industrial Investment

Risk-Adjusted Performance

32 of 100

Very Strong

Compared to the overall equity markets, risk-adjusted returns on investments in Industrial Investment Trust are ranked lower than 32 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unsteady basic indicators, Industrial Investment unveiled solid returns over the last few months and may actually be approaching a breakup point.

DJ Mediaprint Logistics

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in DJ Mediaprint Logistics are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unsteady basic indicators, DJ Mediaprint unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Industrial Investment and DJ Mediaprint

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

The idea behind Industrial Investment Trust and DJ Mediaprint Logistics 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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.