Correlation Between Netmedia Group and Soditech
Can any of the company-specific risk be diversified away by investing in both Netmedia Group and Soditech 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 Netmedia Group and Soditech into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Netmedia Group SA and Soditech SA, you can compare the effects of market volatilities on Netmedia Group and Soditech 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 Netmedia Group with a short position of Soditech. Check out your portfolio center. Please also check ongoing floating volatility patterns of Netmedia Group and Soditech.
Diversification Opportunities for Netmedia Group and Soditech
0.18 | Correlation Coefficient |
Average diversification
The 3 months correlation between Netmedia and Soditech is 0.18. Overlapping area represents the amount of risk that can be diversified away by holding Netmedia Group SA and Soditech SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Soditech SA and Netmedia Group 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 Netmedia Group SA are associated (or correlated) with Soditech. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Soditech SA has no effect on the direction of Netmedia Group i.e., Netmedia Group and Soditech go up and down completely randomly.
Pair Corralation between Netmedia Group and Soditech
Assuming the 90 days trading horizon Netmedia Group SA is expected to generate 8.0 times more return on investment than Soditech. However, Netmedia Group is 8.0 times more volatile than Soditech SA. It trades about 0.1 of its potential returns per unit of risk. Soditech SA is currently generating about -0.21 per unit of risk. If you would invest 190.00 in Netmedia Group SA on September 13, 2024 and sell it today you would earn a total of 10.00 from holding Netmedia Group SA or generate 5.26% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Netmedia Group SA vs. Soditech SA
Performance |
| Timeline |
| Netmedia Group SA |
| Soditech SA |
Netmedia Group and Soditech Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Netmedia Group and Soditech
The main advantage of trading using opposite Netmedia Group and Soditech positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Netmedia Group position performs unexpectedly, Soditech 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 Soditech will offset losses from the drop in Soditech's long position.| Netmedia Group vs. LVMH Mot Hennessy | Netmedia Group vs. LOreal SA | Netmedia Group vs. Hermes International SCA | Netmedia Group vs. Manitou BF SA |
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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.
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