Correlation Between One Media and Indutrade

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

By analyzing existing cross correlation between One Media iP and Indutrade AB, you can compare the effects of market volatilities on One Media and Indutrade 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 One Media with a short position of Indutrade. Check out your portfolio center. Please also check ongoing floating volatility patterns of One Media and Indutrade.

Diversification Opportunities for One Media and Indutrade

0.56

Correlation Coefficient

One Media  Indutrade

Very weak diversification

The 3 months correlation between One and Indutrade is 0.56. Overlapping area represents the amount of risk that can be diversified away by holding One Media iP and Indutrade AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Indutrade AB and One 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 One Media iP are associated (or correlated) with Indutrade. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Indutrade AB has no effect on the direction of One Media i.e., One Media and Indutrade go up and down completely randomly.

Pair Corralation between One Media and Indutrade

Assuming the 90 days trading horizon One Media iP is expected to under-perform the Indutrade. In addition to that, One Media is 1.49 times more volatile than Indutrade AB. It trades about -0.04 of its total potential returns per unit of risk. Indutrade AB is currently generating about 0.27 per unit of volatility. If you would invest  29,900  in Indutrade AB on November 20, 2024 and sell it today you would earn a total of  2,460  from holding Indutrade AB or generate 8.23% return on investment over 90 days.

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

One Media iP  vs.  Indutrade AB

One Media iP

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in One Media iP are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, One Media unveiled solid returns over the last few months and may actually be approaching a breakup point.

Indutrade AB

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Indutrade AB are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Indutrade unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with One Media and Indutrade

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

The idea behind One Media iP and Indutrade AB 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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.