Correlation Between Young Cos and MediaZest Plc

Can any of the company-specific risk be diversified away by investing in both Young Cos and MediaZest 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 Young Cos and MediaZest Plc into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Young Cos Brewery and MediaZest plc, you can compare the effects of market volatilities on Young Cos and MediaZest 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 Young Cos with a short position of MediaZest Plc. Check out your portfolio center. Please also check ongoing floating volatility patterns of Young Cos and MediaZest Plc.

Diversification Opportunities for Young Cos and MediaZest Plc

0.33

Correlation Coefficient

Young Cos  MediaZest Plc

Weak diversification

The 3 months correlation between Young and MediaZest is 0.33. Overlapping area represents the amount of risk that can be diversified away by holding Young Cos Brewery and MediaZest plc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MediaZest plc and Young Cos 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 Young Cos Brewery are associated (or correlated) with MediaZest Plc. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MediaZest plc has no effect on the direction of Young Cos i.e., Young Cos and MediaZest Plc go up and down completely randomly.

Pair Corralation between Young Cos and MediaZest Plc

Assuming the 90 days trading horizon Young Cos Brewery is expected to generate 0.56 times more return on investment than MediaZest Plc. However, Young Cos Brewery is 1.8 times less risky than MediaZest Plc. It trades about -0.07 of its potential returns per unit of risk. MediaZest plc is currently generating about -0.06 per unit of risk. If you would invest  63,800  in Young Cos Brewery on December 4, 2024 and sell it today you would lose (5,000) from holding Young Cos Brewery or give up 7.84% of portfolio value over 90 days.

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

Young Cos Brewery  vs.  MediaZest plc

Young Cos Brewery

Risk-Adjusted Performance

Very Weak

Over the last 90 days Young Cos Brewery has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest uncertain performance, the Stock's basic indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

MediaZest plc

Risk-Adjusted Performance

Very Weak

Over the last 90 days MediaZest plc has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest weak performance, the Stock's technical and fundamental indicators remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for the firm shareholders.

Pair Trading with Young Cos and MediaZest Plc

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

The idea behind Young Cos Brewery and MediaZest 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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.