Correlation Between Next Mediaworks and S P

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

Diversification Opportunities for Next Mediaworks and S P

-0.11

Correlation Coefficient

Next Mediaworks  S P

Good diversification

The 3 months correlation between Next and SPAL is -0.11. Overlapping area represents the amount of risk that can be diversified away by holding Next Mediaworks Limited and S P Apparels in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on S P Apparels 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 S P. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of S P Apparels has no effect on the direction of Next Mediaworks i.e., Next Mediaworks and S P go up and down completely randomly.

Pair Corralation between Next Mediaworks and S P

Assuming the 90 days trading horizon Next Mediaworks Limited is expected to generate 1.34 times more return on investment than S P. However, Next Mediaworks is 1.34 times more volatile than S P Apparels. It trades about 0.12 of its potential returns per unit of risk. S P Apparels is currently generating about 0.04 per unit of risk. If you would invest  747.00  in Next Mediaworks Limited on September 5, 2024 and sell it today you would earn a total of  255.00  from holding Next Mediaworks Limited or generate 34.14% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.41%
Values	Daily Returns

Next Mediaworks Limited  vs.  S P Apparels

Next Mediaworks

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Next Mediaworks Limited are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady fundamental indicators, Next Mediaworks exhibited solid returns over the last few months and may actually be approaching a breakup point.

S P Apparels

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in S P Apparels are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak basic indicators, S P may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Next Mediaworks and S P

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

The idea behind Next Mediaworks Limited and S P Apparels 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.