Correlation Between Aeorema Communications and LBG Media
Can any of the company-specific risk be diversified away by investing in both Aeorema Communications and LBG 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 Aeorema Communications and LBG Media into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Aeorema Communications Plc and LBG Media PLC, you can compare the effects of market volatilities on Aeorema Communications and LBG 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 Aeorema Communications with a short position of LBG Media. Check out your portfolio center. Please also check ongoing floating volatility patterns of Aeorema Communications and LBG Media.
Diversification Opportunities for Aeorema Communications and LBG Media
-0.03 | Correlation Coefficient |
Good diversification
The 3 months correlation between Aeorema and LBG is -0.03. Overlapping area represents the amount of risk that can be diversified away by holding Aeorema Communications Plc and LBG Media PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on LBG Media PLC and Aeorema Communications 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 Aeorema Communications Plc are associated (or correlated) with LBG Media. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of LBG Media PLC has no effect on the direction of Aeorema Communications i.e., Aeorema Communications and LBG Media go up and down completely randomly.
Pair Corralation between Aeorema Communications and LBG Media
Assuming the 90 days trading horizon Aeorema Communications Plc is expected to under-perform the LBG Media. But the stock apears to be less risky and, when comparing its historical volatility, Aeorema Communications Plc is 1.04 times less risky than LBG Media. The stock trades about -0.06 of its potential returns per unit of risk. The LBG Media PLC is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest 8,760 in LBG Media PLC on November 5, 2024 and sell it today you would earn a total of 3,640 from holding LBG Media PLC or generate 41.55% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Aeorema Communications Plc vs. LBG Media PLC
Performance |
| Timeline |
| Aeorema Communications |
| LBG Media PLC |
Aeorema Communications and LBG Media Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Aeorema Communications and LBG Media
The main advantage of trading using opposite Aeorema Communications and LBG Media positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Aeorema Communications position performs unexpectedly, LBG 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 LBG Media will offset losses from the drop in LBG Media's long position.| Aeorema Communications vs. Edinburgh Investment Trust | Aeorema Communications vs. Beowulf Mining | Aeorema Communications vs. Kinnevik Investment AB | Aeorema Communications vs. Griffin Mining |
| LBG Media vs. Samsung Electronics Co | LBG Media vs. Samsung Electronics Co | LBG Media vs. Toyota Motor Corp | LBG Media vs. Reliance Industries Ltd |
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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.
Other Complementary Tools
| Aroon Oscillator Analyze current equity momentum using Aroon Oscillator and other momentum ratios | |
| Balance Of Power Check stock momentum by analyzing Balance Of Power indicator and other technical ratios | |
| Earnings Calls Check upcoming earnings announcements updated hourly across public exchanges | |
| Idea Breakdown Analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes | |
| Price Ceiling Movement Calculate and plot Price Ceiling Movement for different equity instruments |