Correlation Between Media and SBB-B

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

Diversification Opportunities for Media and SBB-B

-0.52

Correlation Coefficient

Media  SBB-B

Excellent diversification

The 3 months correlation between Media and SBB-B is -0.52. Overlapping area represents the amount of risk that can be diversified away by holding Media and Games and Samhllsbyggnadsbolaget i Norde in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Samhllsbyggnadsbolaget 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 SBB-B. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Samhllsbyggnadsbolaget has no effect on the direction of Media i.e., Media and SBB-B go up and down completely randomly.

Pair Corralation between Media and SBB-B

Assuming the 90 days trading horizon Media and Games is expected to under-perform the SBB-B. But the stock apears to be less risky and, when comparing its historical volatility, Media and Games is 1.57 times less risky than SBB-B. The stock trades about -0.01 of its potential returns per unit of risk. The Samhllsbyggnadsbolaget i Norden is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest  386.00  in Samhllsbyggnadsbolaget i Norden on November 29, 2024 and sell it today you would earn a total of  32.00  from holding Samhllsbyggnadsbolaget i Norden or generate 8.29% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	98.31%
Values	Daily Returns

Media and Games  vs.  Samhllsbyggnadsbolaget i Norde

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.

Samhllsbyggnadsbolaget

Risk-Adjusted Performance

Insignificant

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

Pair Trading with Media and SBB-B

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

The idea behind Media and Games and Samhllsbyggnadsbolaget i Norden 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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.