Correlation Between ARN Media and MFF Capital
Can any of the company-specific risk be diversified away by investing in both ARN Media and MFF Capital 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 ARN Media and MFF Capital into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between ARN Media Limited and MFF Capital Investments, you can compare the effects of market volatilities on ARN Media and MFF Capital 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 ARN Media with a short position of MFF Capital. Check out your portfolio center. Please also check ongoing floating volatility patterns of ARN Media and MFF Capital.
Diversification Opportunities for ARN Media and MFF Capital
0.49 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between ARN and MFF is 0.49. Overlapping area represents the amount of risk that can be diversified away by holding ARN Media Limited and MFF Capital Investments in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MFF Capital Investments and ARN Media 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 ARN Media Limited are associated (or correlated) with MFF Capital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MFF Capital Investments has no effect on the direction of ARN Media i.e., ARN Media and MFF Capital go up and down completely randomly.
Pair Corralation between ARN Media and MFF Capital
Assuming the 90 days trading horizon ARN Media is expected to generate 13.79 times less return on investment than MFF Capital. In addition to that, ARN Media is 2.56 times more volatile than MFF Capital Investments. It trades about 0.0 of its total potential returns per unit of risk. MFF Capital Investments is currently generating about 0.16 per unit of volatility. If you would invest 271.00 in MFF Capital Investments on September 1, 2024 and sell it today you would earn a total of 160.00 from holding MFF Capital Investments or generate 59.04% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
ARN Media Limited vs. MFF Capital Investments
Performance |
| Timeline |
| ARN Media Limited |
| MFF Capital Investments |
ARN Media and MFF Capital Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ARN Media and MFF Capital
The main advantage of trading using opposite ARN Media and MFF Capital positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ARN Media position performs unexpectedly, MFF Capital 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 MFF Capital will offset losses from the drop in MFF Capital's long position.| ARN Media vs. Aneka Tambang Tbk | ARN Media vs. BHP Group Limited | ARN Media vs. Commonwealth Bank of | ARN Media vs. Commonwealth Bank of |
| MFF Capital vs. Stelar Metals | MFF Capital vs. Srj Technologies Group | MFF Capital vs. Autosports Group | MFF Capital vs. Perseus Mining |
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 Global Correlations module to find global opportunities by holding instruments from different markets.
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