Correlation Between LBG Media and Power Metal

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

By analyzing existing cross correlation between LBG Media PLC and Power Metal Resources, you can compare the effects of market volatilities on LBG Media and Power Metal 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 LBG Media with a short position of Power Metal. Check out your portfolio center. Please also check ongoing floating volatility patterns of LBG Media and Power Metal.

Diversification Opportunities for LBG Media and Power Metal

0.11

Correlation Coefficient

LBG Media  Power Metal

Average diversification

The 3 months correlation between LBG and Power is 0.11. Overlapping area represents the amount of risk that can be diversified away by holding LBG Media PLC and Power Metal Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Power Metal Resources and LBG 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 LBG Media PLC are associated (or correlated) with Power Metal. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Power Metal Resources has no effect on the direction of LBG Media i.e., LBG Media and Power Metal go up and down completely randomly.

Pair Corralation between LBG Media and Power Metal

Assuming the 90 days trading horizon LBG Media PLC is expected to under-perform the Power Metal. But the stock apears to be less risky and, when comparing its historical volatility, LBG Media PLC is 1.07 times less risky than Power Metal. The stock trades about -0.07 of its potential returns per unit of risk. The Power Metal Resources is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest  1,375  in Power Metal Resources on December 28, 2024 and sell it today you would earn a total of  75.00  from holding Power Metal Resources or generate 5.45% return on investment over 90 days.

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

LBG Media PLC  vs.  Power Metal Resources

LBG Media PLC

Risk-Adjusted Performance

Very Weak

Over the last 90 days LBG Media PLC has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's technical and fundamental indicators remain rather sound which may send shares a bit higher in April 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Power Metal Resources

Risk-Adjusted Performance

Insignificant

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

Pair Trading with LBG Media and Power Metal

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

The idea behind LBG Media PLC and Power Metal Resources 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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.