Correlation Between One Media and XLMedia PLC

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

Diversification Opportunities for One Media and XLMedia PLC

0.35

Correlation Coefficient

One Media  XLMedia PLC

Weak diversification

The 3 months correlation between One and XLMedia is 0.35. Overlapping area represents the amount of risk that can be diversified away by holding One Media iP and XLMedia PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on XLMedia PLC 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 XLMedia PLC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of XLMedia PLC has no effect on the direction of One Media i.e., One Media and XLMedia PLC go up and down completely randomly.

Pair Corralation between One Media and XLMedia PLC

Assuming the 90 days trading horizon One Media is expected to generate 25.6 times less return on investment than XLMedia PLC. But when comparing it to its historical volatility, One Media iP is 1.33 times less risky than XLMedia PLC. It trades about 0.01 of its potential returns per unit of risk. XLMedia PLC is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest  920.00  in XLMedia PLC on December 21, 2024 and sell it today you would earn a total of  118.00  from holding XLMedia PLC or generate 12.83% 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.  XLMedia PLC

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 latest stock price uproar, may contribute to short-horizon losses for the private investors.

XLMedia PLC

Risk-Adjusted Performance

OK

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

Pair Trading with One Media and XLMedia PLC

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

The idea behind One Media iP and XLMedia PLC 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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.