Correlation Between Ziff Davis and VS Media

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

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

Diversification Opportunities for Ziff Davis and VS Media

-0.56

Correlation Coefficient

Ziff Davis  VS Media

Excellent diversification

The 3 months correlation between Ziff and VSME is -0.56. Overlapping area represents the amount of risk that can be diversified away by holding Ziff Davis and VS Media Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on VS Media Holdings and Ziff Davis 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 Ziff Davis are associated (or correlated) with VS Media. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of VS Media Holdings has no effect on the direction of Ziff Davis i.e., Ziff Davis and VS Media go up and down completely randomly.

Pair Corralation between Ziff Davis and VS Media

Allowing for the 90-day total investment horizon Ziff Davis is expected to generate 51.02 times less return on investment than VS Media. But when comparing it to its historical volatility, Ziff Davis is 5.57 times less risky than VS Media. It trades about 0.0 of its potential returns per unit of risk. VS Media Holdings is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest  117.00  in VS Media Holdings on October 23, 2024 and sell it today you would lose (1.00) from holding VS Media Holdings or give up 0.85% of portfolio value over 90 days.

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

Ziff Davis  vs.  VS Media Holdings

Ziff Davis

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Ziff Davis are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of rather fragile fundamental indicators, Ziff Davis exhibited solid returns over the last few months and may actually be approaching a breakup point.

VS Media Holdings

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days VS Media Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's primary indicators remain rather sound which may send shares a bit higher in February 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Pair Trading with Ziff Davis and VS Media

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

The idea behind Ziff Davis and VS Media Holdings 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 Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.