Correlation Between Nasmedia and Digital Multimedia
Can any of the company-specific risk be diversified away by investing in both Nasmedia and Digital Multimedia 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 Nasmedia and Digital Multimedia into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Nasmedia Co and Digital Multimedia Technology, you can compare the effects of market volatilities on Nasmedia and Digital Multimedia 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 Nasmedia with a short position of Digital Multimedia. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nasmedia and Digital Multimedia.
Diversification Opportunities for Nasmedia and Digital Multimedia
0.78 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Nasmedia and Digital is 0.78. Overlapping area represents the amount of risk that can be diversified away by holding Nasmedia Co and Digital Multimedia Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Digital Multimedia and Nasmedia 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 Nasmedia Co are associated (or correlated) with Digital Multimedia. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Digital Multimedia has no effect on the direction of Nasmedia i.e., Nasmedia and Digital Multimedia go up and down completely randomly.
Pair Corralation between Nasmedia and Digital Multimedia
Assuming the 90 days trading horizon Nasmedia Co is expected to generate 0.5 times more return on investment than Digital Multimedia. However, Nasmedia Co is 2.01 times less risky than Digital Multimedia. It trades about -0.16 of its potential returns per unit of risk. Digital Multimedia Technology is currently generating about -0.13 per unit of risk. If you would invest 1,543,000 in Nasmedia Co on August 29, 2024 and sell it today you would lose (87,000) from holding Nasmedia Co or give up 5.64% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Nasmedia Co vs. Digital Multimedia Technology
Performance |
| Timeline |
| Nasmedia |
| Digital Multimedia |
Nasmedia and Digital Multimedia Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Nasmedia and Digital Multimedia
The main advantage of trading using opposite Nasmedia and Digital Multimedia positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Nasmedia position performs unexpectedly, Digital Multimedia 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 Digital Multimedia will offset losses from the drop in Digital Multimedia's long position.The idea behind Nasmedia Co and Digital Multimedia Technology 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.| Digital Multimedia vs. AptaBio Therapeutics | Digital Multimedia vs. Daewoo SBI SPAC | Digital Multimedia vs. Dream Security co | Digital Multimedia vs. Microfriend |
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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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