Correlation Between Krebs Biochemicals and Next Mediaworks

Can any of the company-specific risk be diversified away by investing in both Krebs Biochemicals and Next Mediaworks 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 Krebs Biochemicals and Next Mediaworks into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Krebs Biochemicals and and Next Mediaworks Limited, you can compare the effects of market volatilities on Krebs Biochemicals and Next Mediaworks 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 Krebs Biochemicals with a short position of Next Mediaworks. Check out your portfolio center. Please also check ongoing floating volatility patterns of Krebs Biochemicals and Next Mediaworks.

Diversification Opportunities for Krebs Biochemicals and Next Mediaworks

0.69

Correlation Coefficient

Krebs Biochemicals  Next Mediaworks

Poor diversification

The 3 months correlation between Krebs and Next is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding Krebs Biochemicals and and Next Mediaworks Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Next Mediaworks and Krebs Biochemicals 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 Krebs Biochemicals and are associated (or correlated) with Next Mediaworks. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Next Mediaworks has no effect on the direction of Krebs Biochemicals i.e., Krebs Biochemicals and Next Mediaworks go up and down completely randomly.

Pair Corralation between Krebs Biochemicals and Next Mediaworks

Assuming the 90 days trading horizon Krebs Biochemicals and is expected to generate 1.08 times more return on investment than Next Mediaworks. However, Krebs Biochemicals is 1.08 times more volatile than Next Mediaworks Limited. It trades about 0.1 of its potential returns per unit of risk. Next Mediaworks Limited is currently generating about 0.04 per unit of risk. If you would invest  8,095  in Krebs Biochemicals and on October 27, 2024 and sell it today you would earn a total of  2,052  from holding Krebs Biochemicals and or generate 25.35% return on investment over 90 days.

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

Krebs Biochemicals and  vs.  Next Mediaworks Limited

Krebs Biochemicals and

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Krebs Biochemicals and are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite fairly uncertain fundamental drivers, Krebs Biochemicals demonstrated solid returns over the last few months and may actually be approaching a breakup point.

Next Mediaworks

Risk-Adjusted Performance

3 of 100

Weak

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

Pair Trading with Krebs Biochemicals and Next Mediaworks

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

The idea behind Krebs Biochemicals and and Next Mediaworks Limited 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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.