Correlation Between Postmedia Network and Advent Wireless

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

By analyzing existing cross correlation between Postmedia Network Canada and Advent Wireless, you can compare the effects of market volatilities on Postmedia Network and Advent Wireless 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 Postmedia Network with a short position of Advent Wireless. Check out your portfolio center. Please also check ongoing floating volatility patterns of Postmedia Network and Advent Wireless.

Diversification Opportunities for Postmedia Network and Advent Wireless

0.16

Correlation Coefficient

Postmedia Network  Advent Wireless

Average diversification

The 3 months correlation between Postmedia and Advent is 0.16. Overlapping area represents the amount of risk that can be diversified away by holding Postmedia Network Canada and Advent Wireless in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Advent Wireless and Postmedia Network 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 Postmedia Network Canada are associated (or correlated) with Advent Wireless. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Advent Wireless has no effect on the direction of Postmedia Network i.e., Postmedia Network and Advent Wireless go up and down completely randomly.

Pair Corralation between Postmedia Network and Advent Wireless

Assuming the 90 days trading horizon Postmedia Network Canada is expected to generate 1.3 times more return on investment than Advent Wireless. However, Postmedia Network is 1.3 times more volatile than Advent Wireless. It trades about -0.1 of its potential returns per unit of risk. Advent Wireless is currently generating about -0.13 per unit of risk. If you would invest  125.00  in Postmedia Network Canada on December 3, 2024 and sell it today you would lose (28.00) from holding Postmedia Network Canada or give up 22.4% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	98.36%
Values	Daily Returns

Postmedia Network Canada  vs.  Advent Wireless

Postmedia Network Canada

Risk-Adjusted Performance

Very Weak

Over the last 90 days Postmedia Network Canada has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in April 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Advent Wireless

Risk-Adjusted Performance

Very Weak

Over the last 90 days Advent Wireless has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unfluctuating performance in the last few months, the Stock's basic indicators remain fairly stable which may send shares a bit higher in April 2025. The latest fuss may also be a sign of long-term up-swing for the venture sophisticated investors.

Pair Trading with Postmedia Network and Advent Wireless

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

The idea behind Postmedia Network Canada and Advent Wireless 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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.