Correlation Between One Media and Centaur Media

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

Diversification Opportunities for One Media and Centaur Media

0.26

Correlation Coefficient

One Media  Centaur Media

Modest diversification

The 3 months correlation between One and Centaur is 0.26. Overlapping area represents the amount of risk that can be diversified away by holding One Media iP and Centaur Media in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Centaur Media 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 Centaur Media. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Centaur Media has no effect on the direction of One Media i.e., One Media and Centaur Media go up and down completely randomly.

Pair Corralation between One Media and Centaur Media

Assuming the 90 days trading horizon One Media is expected to generate 28.65 times less return on investment than Centaur Media. But when comparing it to its historical volatility, One Media iP is 2.15 times less risky than Centaur Media. It trades about 0.01 of its potential returns per unit of risk. Centaur Media is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest  2,300  in Centaur Media on December 23, 2024 and sell it today you would earn a total of  300.00  from holding Centaur Media or generate 13.04% return on investment over 90 days.

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

One Media iP  vs.  Centaur Media

One Media iP

Risk-Adjusted Performance

Very Weak

Over the last 90 days One Media iP has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, One Media is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Centaur Media

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Centaur Media are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of rather uncertain technical and fundamental indicators, Centaur Media exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with One Media and Centaur Media

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

The idea behind One Media iP and Centaur Media 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 CEOs Directory module to screen CEOs from public companies around the world.