Correlation Between Reworld Media and CMG Cleantech
Can any of the company-specific risk be diversified away by investing in both Reworld Media and CMG Cleantech 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 Reworld Media and CMG Cleantech into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Reworld Media and CMG Cleantech SA, you can compare the effects of market volatilities on Reworld Media and CMG Cleantech 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 Reworld Media with a short position of CMG Cleantech. Check out your portfolio center. Please also check ongoing floating volatility patterns of Reworld Media and CMG Cleantech.
Diversification Opportunities for Reworld Media and CMG Cleantech
-0.4 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Reworld and CMG is -0.4. Overlapping area represents the amount of risk that can be diversified away by holding Reworld Media and CMG Cleantech SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CMG Cleantech SA and Reworld 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 Reworld Media are associated (or correlated) with CMG Cleantech. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CMG Cleantech SA has no effect on the direction of Reworld Media i.e., Reworld Media and CMG Cleantech go up and down completely randomly.
Pair Corralation between Reworld Media and CMG Cleantech
Assuming the 90 days trading horizon Reworld Media is expected to under-perform the CMG Cleantech. But the stock apears to be less risky and, when comparing its historical volatility, Reworld Media is 1.38 times less risky than CMG Cleantech. The stock trades about -0.17 of its potential returns per unit of risk. The CMG Cleantech SA is currently generating about 0.23 of returns per unit of risk over similar time horizon. If you would invest 68.00 in CMG Cleantech SA on September 4, 2024 and sell it today you would earn a total of 55.00 from holding CMG Cleantech SA or generate 80.88% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 98.46% |
| Values | Daily Returns |
Reworld Media vs. CMG Cleantech SA
Performance |
| Timeline |
| Reworld Media |
| CMG Cleantech SA |
Reworld Media and CMG Cleantech Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Reworld Media and CMG Cleantech
The main advantage of trading using opposite Reworld Media and CMG Cleantech positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Reworld Media position performs unexpectedly, CMG Cleantech 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 CMG Cleantech will offset losses from the drop in CMG Cleantech's long position.| Reworld Media vs. Spineguard | Reworld Media vs. Vallourec | Reworld Media vs. Manitou BF SA | Reworld Media vs. Ossiam Minimum Variance |
| CMG Cleantech vs. EPC Groupe | CMG Cleantech vs. Groupe Sfpi | CMG Cleantech vs. Baikowski SASU | CMG Cleantech vs. NSE 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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