Correlation Between Next Mediaworks and Agro Tech

Can any of the company-specific risk be diversified away by investing in both Next Mediaworks and Agro Tech 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 Next Mediaworks and Agro Tech into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Next Mediaworks Limited and Agro Tech Foods, you can compare the effects of market volatilities on Next Mediaworks and Agro Tech 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 Next Mediaworks with a short position of Agro Tech. Check out your portfolio center. Please also check ongoing floating volatility patterns of Next Mediaworks and Agro Tech.

Diversification Opportunities for Next Mediaworks and Agro Tech

0.05

Correlation Coefficient

Next Mediaworks  Agro Tech

Significant diversification

The 3 months correlation between Next and Agro is 0.05. Overlapping area represents the amount of risk that can be diversified away by holding Next Mediaworks Limited and Agro Tech Foods in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Agro Tech Foods and Next Mediaworks 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 Next Mediaworks Limited are associated (or correlated) with Agro Tech. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Agro Tech Foods has no effect on the direction of Next Mediaworks i.e., Next Mediaworks and Agro Tech go up and down completely randomly.

Pair Corralation between Next Mediaworks and Agro Tech

Assuming the 90 days trading horizon Next Mediaworks Limited is expected to under-perform the Agro Tech. In addition to that, Next Mediaworks is 1.12 times more volatile than Agro Tech Foods. It trades about -0.42 of its total potential returns per unit of risk. Agro Tech Foods is currently generating about -0.08 per unit of volatility. If you would invest  95,670  in Agro Tech Foods on October 4, 2024 and sell it today you would lose (3,265) from holding Agro Tech Foods or give up 3.41% of portfolio value over 90 days.

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

Next Mediaworks Limited  vs.  Agro Tech Foods

Next Mediaworks

Risk-Adjusted Performance

5 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Next Mediaworks Limited are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of rather uncertain fundamental indicators, Next Mediaworks exhibited solid returns over the last few months and may actually be approaching a breakup point.

Agro Tech Foods

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Agro Tech Foods are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Agro Tech may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Next Mediaworks and Agro Tech

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

The idea behind Next Mediaworks Limited and Agro Tech Foods 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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.