Correlation Between CMG Cleantech and Netmedia Group

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

By analyzing existing cross correlation between CMG Cleantech SA and Netmedia Group SA, you can compare the effects of market volatilities on CMG Cleantech and Netmedia 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 CMG Cleantech with a short position of Netmedia Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of CMG Cleantech and Netmedia Group.

Diversification Opportunities for CMG Cleantech and Netmedia Group

0.18

Correlation Coefficient

CMG Cleantech  Netmedia Group

Average diversification

The 3 months correlation between CMG and Netmedia is 0.18. Overlapping area represents the amount of risk that can be diversified away by holding CMG Cleantech SA and Netmedia Group SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Netmedia Group SA and CMG Cleantech 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 CMG Cleantech SA are associated (or correlated) with Netmedia Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Netmedia Group SA has no effect on the direction of CMG Cleantech i.e., CMG Cleantech and Netmedia Group go up and down completely randomly.

Pair Corralation between CMG Cleantech and Netmedia Group

Assuming the 90 days trading horizon CMG Cleantech SA is expected to under-perform the Netmedia Group. But the stock apears to be less risky and, when comparing its historical volatility, CMG Cleantech SA is 2.21 times less risky than Netmedia Group. The stock trades about -0.11 of its potential returns per unit of risk. The Netmedia Group SA is currently generating about -0.02 of returns per unit of risk over similar time horizon. If you would invest  167.00  in Netmedia Group SA on December 30, 2024 and sell it today you would lose (22.00) from holding Netmedia Group SA or give up 13.17% of portfolio value over 90 days.

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

CMG Cleantech SA  vs.  Netmedia Group SA

CMG Cleantech SA

Risk-Adjusted Performance

Very Weak

Over the last 90 days CMG Cleantech SA has generated negative risk-adjusted returns adding no value to investors with long positions. Even with weak performance in the last few months, the Stock's basic indicators remain relatively invariable which may send shares a bit higher in April 2025. The latest agitation may also be a sign of long-running up-swing for the enterprise retail investors.

Netmedia Group SA

Risk-Adjusted Performance

Very Weak

Over the last 90 days Netmedia Group SA has generated negative risk-adjusted returns adding no value to investors with long positions. Even with latest weak performance, the Stock's basic indicators remain invariable and the latest agitation on Wall Street may also be a sign of long-running gains for the enterprise retail investors.

Pair Trading with CMG Cleantech and Netmedia Group

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

The idea behind CMG Cleantech SA and Netmedia Group SA 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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.