Correlation Between Network Media and Celtic Plc

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

By analyzing existing cross correlation between Network Media Group and Celtic plc, you can compare the effects of market volatilities on Network Media and Celtic Plc 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 Network Media with a short position of Celtic Plc. Check out your portfolio center. Please also check ongoing floating volatility patterns of Network Media and Celtic Plc.

Diversification Opportunities for Network Media and Celtic Plc

0.04

Correlation Coefficient

Network Media  Celtic Plc

Significant diversification

The 3 months correlation between Network and Celtic is 0.04. Overlapping area represents the amount of risk that can be diversified away by holding Network Media Group and Celtic plc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Celtic plc and Network 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 Network Media Group are associated (or correlated) with Celtic Plc. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Celtic plc has no effect on the direction of Network Media i.e., Network Media and Celtic Plc go up and down completely randomly.

Pair Corralation between Network Media and Celtic Plc

Assuming the 90 days horizon Network Media Group is expected to under-perform the Celtic Plc. But the otc stock apears to be less risky and, when comparing its historical volatility, Network Media Group is 1.0 times less risky than Celtic Plc. The otc stock trades about -0.01 of its potential returns per unit of risk. The Celtic plc is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest  207.00  in Celtic plc on December 29, 2024 and sell it today you would lose (1.00) from holding Celtic plc or give up 0.48% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	98.39%
Values	Daily Returns

Network Media Group  vs.  Celtic plc

Network Media Group

Risk-Adjusted Performance

Very Weak

Over the last 90 days Network Media Group has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Network Media is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Celtic plc

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Celtic plc are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable technical and fundamental indicators, Celtic Plc is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Network Media and Celtic Plc

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

The idea behind Network Media Group and Celtic plc 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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.