Correlation Between International Media and Chavant Capital

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

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

Diversification Opportunities for International Media and Chavant Capital

0.32

Correlation Coefficient

International Media  Chavant Capital

Weak diversification

The 3 months correlation between International and Chavant is 0.32. Overlapping area represents the amount of risk that can be diversified away by holding International Media Acquisitio and Chavant Capital Acquisition in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Chavant Capital Acqu and International Media 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 International Media Acquisition are associated (or correlated) with Chavant Capital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Chavant Capital Acqu has no effect on the direction of International Media i.e., International Media and Chavant Capital go up and down completely randomly.

Pair Corralation between International Media and Chavant Capital

Assuming the 90 days horizon International Media Acquisition is expected to generate 4.86 times more return on investment than Chavant Capital. However, International Media is 4.86 times more volatile than Chavant Capital Acquisition. It trades about 0.08 of its potential returns per unit of risk. Chavant Capital Acquisition is currently generating about -0.01 per unit of risk. If you would invest  10.00  in International Media Acquisition on October 26, 2024 and sell it today you would lose (4.00) from holding International Media Acquisition or give up 40.0% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	34.3%
Values	Daily Returns

International Media Acquisitio  vs.  Chavant Capital Acquisition

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. Even with relatively invariable basic indicators, International Media is not utilizing all of its potentials. The current stock price agitation, may contribute to short-term losses for the retail investors.

Chavant Capital Acqu

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Chavant Capital Acquisition has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable basic indicators, Chavant Capital is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Pair Trading with International Media and Chavant Capital

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

The idea behind International Media Acquisition and Chavant Capital 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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.