Correlation Between Media and Flexion Mobile

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

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

Diversification Opportunities for Media and Flexion Mobile

-0.56

Correlation Coefficient

Media  Flexion Mobile

Excellent diversification

The 3 months correlation between Media and Flexion is -0.56. Overlapping area represents the amount of risk that can be diversified away by holding Media and Games and Flexion Mobile PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Flexion Mobile PLC and 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 Media and Games are associated (or correlated) with Flexion Mobile. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Flexion Mobile PLC has no effect on the direction of Media i.e., Media and Flexion Mobile go up and down completely randomly.

Pair Corralation between Media and Flexion Mobile

Assuming the 90 days trading horizon Media and Games is expected to generate 1.2 times more return on investment than Flexion Mobile. However, Media is 1.2 times more volatile than Flexion Mobile PLC. It trades about 0.05 of its potential returns per unit of risk. Flexion Mobile PLC is currently generating about -0.02 per unit of risk. If you would invest  1,982  in Media and Games on September 26, 2024 and sell it today you would earn a total of  1,623  from holding Media and Games or generate 81.89% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

Media and Games  vs.  Flexion Mobile PLC

Media and Games

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Media and Games has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable technical and fundamental indicators, Media is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

Flexion Mobile PLC

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Flexion Mobile PLC has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Flexion Mobile is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Media and Flexion Mobile

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

The idea behind Media and Games and Flexion Mobile 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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.