Correlation Between ITV PLC and Aferian Plc

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

By analyzing existing cross correlation between ITV PLC ADR and Aferian Plc, you can compare the effects of market volatilities on ITV PLC and Aferian 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 ITV PLC with a short position of Aferian Plc. Check out your portfolio center. Please also check ongoing floating volatility patterns of ITV PLC and Aferian Plc.

Diversification Opportunities for ITV PLC and Aferian Plc

0.0

Correlation Coefficient

ITV PLC  Aferian Plc

Pay attention - limited upside

The 3 months correlation between ITV and Aferian is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding ITV PLC ADR and Aferian Plc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aferian Plc and ITV PLC 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 ITV PLC ADR are associated (or correlated) with Aferian Plc. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aferian Plc has no effect on the direction of ITV PLC i.e., ITV PLC and Aferian Plc go up and down completely randomly.

Pair Corralation between ITV PLC and Aferian Plc

If you would invest  911.00  in ITV PLC ADR on December 28, 2024 and sell it today you would earn a total of  118.00  from holding ITV PLC ADR or generate 12.95% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	96.83%
Values	Daily Returns

ITV PLC ADR  vs.  Aferian Plc

ITV PLC ADR

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in ITV PLC ADR are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak basic indicators, ITV PLC showed solid returns over the last few months and may actually be approaching a breakup point.

Aferian Plc

Risk-Adjusted Performance

Very Weak

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

Pair Trading with ITV PLC and Aferian Plc

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

The idea behind ITV PLC ADR and Aferian 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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.