Correlation Between Media and Investment

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

Diversification Opportunities for Media and Investment

0.39

Correlation Coefficient

Media  Investment

Weak diversification

The 3 months correlation between Media and Investment is 0.39. Overlapping area represents the amount of risk that can be diversified away by holding Media and Games and Investment AB Oresund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Investment AB Oresund 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 Investment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Investment AB Oresund has no effect on the direction of Media i.e., Media and Investment go up and down completely randomly.

Pair Corralation between Media and Investment

Assuming the 90 days trading horizon Media and Games is expected to generate 2.58 times more return on investment than Investment. However, Media is 2.58 times more volatile than Investment AB Oresund. It trades about 0.05 of its potential returns per unit of risk. Investment AB Oresund is currently generating about 0.08 per unit of risk. If you would invest  3,605  in Media and Games on December 22, 2024 and sell it today you would earn a total of  285.00  from holding Media and Games or generate 7.91% return on investment over 90 days.

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

Media and Games  vs.  Investment AB Oresund

Media and Games

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Media and Games are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak technical and fundamental indicators, Media unveiled solid returns over the last few months and may actually be approaching a breakup point.

Investment AB Oresund

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Investment AB Oresund are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Investment may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Media and Investment

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

The idea behind Media and Games and Investment AB Oresund 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.

Check out your portfolio center.

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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.