Correlation Between International Media and Inception Growth

Can any of the company-specific risk be diversified away by investing in both International Media and Inception Growth 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 Inception Growth 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 Inception Growth Acquisition, you can compare the effects of market volatilities on International Media and Inception Growth 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 Inception Growth. Check out your portfolio center. Please also check ongoing floating volatility patterns of International Media and Inception Growth.

Diversification Opportunities for International Media and Inception Growth

-0.01

Correlation Coefficient

International Media  Inception Growth

Good diversification

The 3 months correlation between International and Inception is -0.01. Overlapping area represents the amount of risk that can be diversified away by holding International Media Acquisitio and Inception Growth Acquisition in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Inception Growth Acq 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 Inception Growth. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Inception Growth Acq has no effect on the direction of International Media i.e., International Media and Inception Growth go up and down completely randomly.

Pair Corralation between International Media and Inception Growth

Assuming the 90 days horizon International Media is expected to generate 18.78 times less return on investment than Inception Growth. But when comparing it to its historical volatility, International Media Acquisition is 10.43 times less risky than Inception Growth. It trades about 0.09 of its potential returns per unit of risk. Inception Growth Acquisition is currently generating about 0.16 of returns per unit of risk over similar time horizon. If you would invest  19.00  in Inception Growth Acquisition on October 9, 2024 and sell it today you would lose (14.00) from holding Inception Growth Acquisition or give up 73.68% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	59.17%
Values	Daily Returns

International Media Acquisitio  vs.  Inception Growth 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 recent stock price agitation, may contribute to short-term losses for the retail investors.

Inception Growth Acq

Risk-Adjusted Performance

0 of 100

Good

Over the last 90 days Inception Growth Acquisition has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively weak basic indicators, Inception Growth reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with International Media and Inception Growth

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

The idea behind International Media Acquisition and Inception Growth 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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.