Correlation Between Link Net and Visi Media

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

By analyzing existing cross correlation between Link Net Tbk and Visi Media Asia, you can compare the effects of market volatilities on Link Net and Visi Media 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 Link Net with a short position of Visi Media. Check out your portfolio center. Please also check ongoing floating volatility patterns of Link Net and Visi Media.

Diversification Opportunities for Link Net and Visi Media

0.76

Correlation Coefficient

Link Net  Visi Media

Poor diversification

The 3 months correlation between Link and Visi is 0.76. Overlapping area represents the amount of risk that can be diversified away by holding Link Net Tbk and Visi Media Asia in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Visi Media Asia and Link Net 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 Link Net Tbk are associated (or correlated) with Visi Media. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Visi Media Asia has no effect on the direction of Link Net i.e., Link Net and Visi Media go up and down completely randomly.

Pair Corralation between Link Net and Visi Media

Assuming the 90 days trading horizon Link Net Tbk is expected to generate 1.52 times more return on investment than Visi Media. However, Link Net is 1.52 times more volatile than Visi Media Asia. It trades about 0.44 of its potential returns per unit of risk. Visi Media Asia is currently generating about 0.64 per unit of risk. If you would invest  117,000  in Link Net Tbk on October 27, 2024 and sell it today you would earn a total of  114,000  from holding Link Net Tbk or generate 97.44% return on investment over 90 days.

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

Link Net Tbk  vs.  Visi Media Asia

Link Net Tbk

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Link Net Tbk are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting forward-looking signals, Link Net disclosed solid returns over the last few months and may actually be approaching a breakup point.

Visi Media Asia

Risk-Adjusted Performance

25 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Visi Media Asia are ranked lower than 25 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting forward-looking signals, Visi Media disclosed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Link Net and Visi Media

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

The idea behind Link Net Tbk and Visi Media Asia 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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.