Correlation Between Nasmedia and Innodep
Can any of the company-specific risk be diversified away by investing in both Nasmedia and Innodep 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 Innodep into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Nasmedia Co and Innodep, you can compare the effects of market volatilities on Nasmedia and Innodep 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 Innodep. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nasmedia and Innodep.
Diversification Opportunities for Nasmedia and Innodep
Very poor diversification
The 3 months correlation between Nasmedia and Innodep is 0.88. Overlapping area represents the amount of risk that can be diversified away by holding Nasmedia Co and Innodep in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Innodep 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 Innodep. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Innodep has no effect on the direction of Nasmedia i.e., Nasmedia and Innodep go up and down completely randomly.
Pair Corralation between Nasmedia and Innodep
Assuming the 90 days trading horizon Nasmedia Co is expected to under-perform the Innodep. But the stock apears to be less risky and, when comparing its historical volatility, Nasmedia Co is 1.34 times less risky than Innodep. The stock trades about -0.11 of its potential returns per unit of risk. The Innodep is currently generating about -0.05 of returns per unit of risk over similar time horizon. If you would invest 723,000 in Innodep on September 5, 2024 and sell it today you would lose (25,000) from holding Innodep or give up 3.46% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Nasmedia Co vs. Innodep
Performance |
| Timeline |
| Nasmedia |
| Innodep |
Nasmedia and Innodep Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Nasmedia and Innodep
The main advantage of trading using opposite Nasmedia and Innodep positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Nasmedia position performs unexpectedly, Innodep 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 Innodep will offset losses from the drop in Innodep's long position.| Nasmedia vs. Korea New Network | Nasmedia vs. ICD Co | Nasmedia vs. DYPNF CoLtd | Nasmedia vs. Busan Industrial Co |
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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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.
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