Correlation Between ZINC MEDIA and XLMedia PLC

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

Diversification Opportunities for ZINC MEDIA and XLMedia PLC

-0.77
  Correlation Coefficient

Pay attention - limited upside

The 3 months correlation between ZINC and XLMedia is -0.77. Overlapping area represents the amount of risk that can be diversified away by holding ZINC MEDIA GR and XLMedia PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on XLMedia PLC and ZINC 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 ZINC MEDIA GR 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 ZINC MEDIA i.e., ZINC MEDIA and XLMedia PLC go up and down completely randomly.

Pair Corralation between ZINC MEDIA and XLMedia PLC

Assuming the 90 days trading horizon ZINC MEDIA GR is expected to under-perform the XLMedia PLC. In addition to that, ZINC MEDIA is 1.18 times more volatile than XLMedia PLC. It trades about -0.22 of its total potential returns per unit of risk. XLMedia PLC is currently generating about 0.01 per unit of volatility. If you would invest  13.00  in XLMedia PLC on September 19, 2024 and sell it today you would earn a total of  0.00  from holding XLMedia PLC or generate 0.0% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthWeak
Accuracy100.0%
ValuesDaily Returns

ZINC MEDIA GR  vs.  XLMedia PLC

 Performance 
       Timeline  
ZINC MEDIA GR 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days ZINC MEDIA GR has generated negative risk-adjusted returns adding no value to investors with long positions. Despite uncertain performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.
XLMedia PLC 

Risk-Adjusted Performance

7 of 100

 
Weak
 
Strong
OK
Compared to the overall equity markets, risk-adjusted returns on investments in XLMedia PLC are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, XLMedia PLC reported solid returns over the last few months and may actually be approaching a breakup point.

ZINC MEDIA and XLMedia PLC Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with ZINC MEDIA and XLMedia PLC

The main advantage of trading using opposite ZINC MEDIA and XLMedia PLC positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ZINC 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 ZINC MEDIA GR 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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.

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