Correlation Between Next Mediaworks and PTC India

Can any of the company-specific risk be diversified away by investing in both Next Mediaworks and PTC India 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 PTC India 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 PTC India Financial, you can compare the effects of market volatilities on Next Mediaworks and PTC India 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 PTC India. Check out your portfolio center. Please also check ongoing floating volatility patterns of Next Mediaworks and PTC India.

Diversification Opportunities for Next Mediaworks and PTC India

-0.3

Correlation Coefficient

Next Mediaworks  PTC India

Very good diversification

The 3 months correlation between Next and PTC is -0.3. Overlapping area represents the amount of risk that can be diversified away by holding Next Mediaworks Limited and PTC India Financial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PTC India Financial 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 PTC India. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PTC India Financial has no effect on the direction of Next Mediaworks i.e., Next Mediaworks and PTC India go up and down completely randomly.

Pair Corralation between Next Mediaworks and PTC India

Assuming the 90 days trading horizon Next Mediaworks Limited is expected to under-perform the PTC India. But the stock apears to be less risky and, when comparing its historical volatility, Next Mediaworks Limited is 2.28 times less risky than PTC India. The stock trades about -0.75 of its potential returns per unit of risk. The PTC India Financial is currently generating about -0.11 of returns per unit of risk over similar time horizon. If you would invest  4,451  in PTC India Financial on October 9, 2024 and sell it today you would lose (300.00) from holding PTC India Financial or give up 6.74% of portfolio value over 90 days.

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

Next Mediaworks Limited  vs.  PTC India Financial

Next Mediaworks

Risk-Adjusted Performance

5 of 100

Modest

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.

PTC India Financial

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days PTC India Financial has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's technical and fundamental indicators remain rather sound which may send shares a bit higher in February 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Pair Trading with Next Mediaworks and PTC India

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

The idea behind Next Mediaworks Limited and PTC India Financial 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 Valuation module to check real value of public entities based on technical and fundamental data.