Correlation Between Media and MilDef Group

Can any of the company-specific risk be diversified away by investing in both Media and MilDef Group 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 MilDef Group 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 MilDef Group AB, you can compare the effects of market volatilities on Media and MilDef Group 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 MilDef Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of Media and MilDef Group.

Diversification Opportunities for Media and MilDef Group

-0.27

Correlation Coefficient

Media  MilDef Group

Very good diversification

The 3 months correlation between Media and MilDef is -0.27. Overlapping area represents the amount of risk that can be diversified away by holding Media and Games and MilDef Group AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MilDef Group AB 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 MilDef Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MilDef Group AB has no effect on the direction of Media i.e., Media and MilDef Group go up and down completely randomly.

Pair Corralation between Media and MilDef Group

Assuming the 90 days trading horizon Media and Games is expected to under-perform the MilDef Group. But the stock apears to be less risky and, when comparing its historical volatility, Media and Games is 1.1 times less risky than MilDef Group. The stock trades about -0.02 of its potential returns per unit of risk. The MilDef Group AB is currently generating about 0.22 of returns per unit of risk over similar time horizon. If you would invest  11,800  in MilDef Group AB on November 29, 2024 and sell it today you would earn a total of  6,420  from holding MilDef Group AB or generate 54.41% return on investment over 90 days.

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

Media and Games  vs.  MilDef Group AB

Media and Games

Risk-Adjusted Performance

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.

MilDef Group AB

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in MilDef Group AB are ranked lower than 17 (%) of all global equities and portfolios over the last 90 days. Despite somewhat uncertain essential indicators, MilDef Group sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Media and MilDef Group

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

The idea behind Media and Games and MilDef Group AB 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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..