Correlation Between Zodiac Clothing and Next Mediaworks

Can any of the company-specific risk be diversified away by investing in both Zodiac Clothing and Next Mediaworks 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 Zodiac Clothing and Next Mediaworks into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Zodiac Clothing and Next Mediaworks Limited, you can compare the effects of market volatilities on Zodiac Clothing and Next Mediaworks 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 Zodiac Clothing with a short position of Next Mediaworks. Check out your portfolio center. Please also check ongoing floating volatility patterns of Zodiac Clothing and Next Mediaworks.

Diversification Opportunities for Zodiac Clothing and Next Mediaworks

0.67

Correlation Coefficient

Zodiac Clothing  Next Mediaworks

Poor diversification

The 3 months correlation between Zodiac and Next is 0.67. Overlapping area represents the amount of risk that can be diversified away by holding Zodiac Clothing and Next Mediaworks Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Next Mediaworks and Zodiac Clothing 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 Zodiac Clothing are associated (or correlated) with Next Mediaworks. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Next Mediaworks has no effect on the direction of Zodiac Clothing i.e., Zodiac Clothing and Next Mediaworks go up and down completely randomly.

Pair Corralation between Zodiac Clothing and Next Mediaworks

Assuming the 90 days trading horizon Zodiac Clothing is expected to generate 1.34 times more return on investment than Next Mediaworks. However, Zodiac Clothing is 1.34 times more volatile than Next Mediaworks Limited. It trades about -0.14 of its potential returns per unit of risk. Next Mediaworks Limited is currently generating about -0.28 per unit of risk. If you would invest  11,904  in Zodiac Clothing on December 2, 2024 and sell it today you would lose (3,066) from holding Zodiac Clothing or give up 25.76% of portfolio value over 90 days.

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

Zodiac Clothing  vs.  Next Mediaworks Limited

Zodiac Clothing

Risk-Adjusted Performance

Very Weak

Over the last 90 days Zodiac Clothing has generated negative risk-adjusted returns adding no value to investors with long positions. Despite inconsistent performance in the last few months, the Stock's basic indicators remain quite persistent which may send shares a bit higher in April 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Next Mediaworks

Risk-Adjusted Performance

Very Weak

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

Pair Trading with Zodiac Clothing and Next Mediaworks

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

The idea behind Zodiac Clothing and Next Mediaworks Limited 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.

Check out your portfolio center.

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 Anywhere module to track or share privately all of your investments from the convenience of any device.