Correlation Between Next Mediaworks and Styrenix Performance

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

Diversification Opportunities for Next Mediaworks and Styrenix Performance

0.3
  Correlation Coefficient

Weak diversification

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

Pair Corralation between Next Mediaworks and Styrenix Performance

Assuming the 90 days trading horizon Next Mediaworks Limited is expected to generate 2.45 times more return on investment than Styrenix Performance. However, Next Mediaworks is 2.45 times more volatile than Styrenix Performance Materials. It trades about 0.08 of its potential returns per unit of risk. Styrenix Performance Materials is currently generating about 0.18 per unit of risk. If you would invest  700.00  in Next Mediaworks Limited on October 8, 2024 and sell it today you would earn a total of  121.00  from holding Next Mediaworks Limited or generate 17.29% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthVery Weak
Accuracy100.0%
ValuesDaily Returns

Next Mediaworks Limited  vs.  Styrenix Performance Materials

 Performance 
       Timeline  
Next Mediaworks 

Risk-Adjusted Performance

5 of 100

 
Weak
 
Strong
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 weak fundamental indicators, Next Mediaworks exhibited solid returns over the last few months and may actually be approaching a breakup point.
Styrenix Performance 

Risk-Adjusted Performance

14 of 100

 
Weak
 
Strong
Good
Compared to the overall equity markets, risk-adjusted returns on investments in Styrenix Performance Materials are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. Despite fairly weak basic indicators, Styrenix Performance demonstrated solid returns over the last few months and may actually be approaching a breakup point.

Next Mediaworks and Styrenix Performance Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Next Mediaworks and Styrenix Performance

The main advantage of trading using opposite Next Mediaworks and Styrenix Performance positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Next Mediaworks position performs unexpectedly, Styrenix Performance 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 Styrenix Performance will offset losses from the drop in Styrenix Performance's long position.
The idea behind Next Mediaworks Limited and Styrenix Performance Materials 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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.

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