Correlation Between Remedy Entertainment and Alma Media

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

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

Diversification Opportunities for Remedy Entertainment and Alma Media

0.1

Correlation Coefficient

Remedy Entertainment  Alma Media

Average diversification

The 3 months correlation between Remedy and Alma is 0.1. Overlapping area represents the amount of risk that can be diversified away by holding Remedy Entertainment Oyj and Alma Media Oyj in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Alma Media Oyj and Remedy Entertainment 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 Remedy Entertainment Oyj are associated (or correlated) with Alma Media. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Alma Media Oyj has no effect on the direction of Remedy Entertainment i.e., Remedy Entertainment and Alma Media go up and down completely randomly.

Pair Corralation between Remedy Entertainment and Alma Media

Assuming the 90 days trading horizon Remedy Entertainment is expected to generate 4.2 times less return on investment than Alma Media. In addition to that, Remedy Entertainment is 1.28 times more volatile than Alma Media Oyj. It trades about 0.02 of its total potential returns per unit of risk. Alma Media Oyj is currently generating about 0.12 per unit of volatility. If you would invest  1,100  in Alma Media Oyj on December 30, 2024 and sell it today you would earn a total of  145.00  from holding Alma Media Oyj or generate 13.18% return on investment over 90 days.

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

Remedy Entertainment Oyj  vs.  Alma Media Oyj

Remedy Entertainment Oyj

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Remedy Entertainment Oyj are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong primary indicators, Remedy Entertainment is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Alma Media Oyj

Risk-Adjusted Performance

OK

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

Pair Trading with Remedy Entertainment and Alma Media

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

The idea behind Remedy Entertainment Oyj and Alma Media Oyj 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 Portfolio Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.