Correlation Between NCR Corp and Here Media

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

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

Diversification Opportunities for NCR Corp and Here Media

0.0

Correlation Coefficient

NCR Corp  Here Media

Pay attention - limited upside

The 3 months correlation between NCR and Here is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding NCR Corp Pref and Here Media in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Here Media and NCR Corp 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 NCR Corp Pref are associated (or correlated) with Here Media. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Here Media has no effect on the direction of NCR Corp i.e., NCR Corp and Here Media go up and down completely randomly.

Pair Corralation between NCR Corp and Here Media

Assuming the 90 days horizon NCR Corp is expected to generate 1.33 times less return on investment than Here Media. But when comparing it to its historical volatility, NCR Corp Pref is 1.97 times less risky than Here Media. It trades about 0.07 of its potential returns per unit of risk. Here Media is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest  0.01  in Here Media on October 12, 2024 and sell it today you would earn a total of  0.01  from holding Here Media or generate 100.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	56.14%
Values	Daily Returns

NCR Corp Pref  vs.  Here Media

NCR Corp Pref

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days NCR Corp Pref has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable basic indicators, NCR Corp is not utilizing all of its potentials. The recent stock price agitation, may contribute to short-term losses for the retail investors.

Here Media

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Here Media has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent forward indicators, Here Media is not utilizing all of its potentials. The latest stock price mess, may contribute to short-term losses for the institutional investors.

Pair Trading with NCR Corp and Here Media

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

The idea behind NCR Corp Pref and Here Media 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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.