Correlation Between Evolution and Media
Can any of the company-specific risk be diversified away by investing in both Evolution and 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 Evolution and Media into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Evolution AB and Media and Games, you can compare the effects of market volatilities on Evolution and 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 Evolution with a short position of Media. Check out your portfolio center. Please also check ongoing floating volatility patterns of Evolution and Media.
Diversification Opportunities for Evolution and Media
Very poor diversification
The 3 months correlation between Evolution and Media is 0.84. Overlapping area represents the amount of risk that can be diversified away by holding Evolution AB and Media and Games in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Media and Games and Evolution 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 Evolution AB are associated (or correlated) with Media. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Media and Games has no effect on the direction of Evolution i.e., Evolution and Media go up and down completely randomly.
Pair Corralation between Evolution and Media
Assuming the 90 days trading horizon Evolution AB is expected to under-perform the Media. But the stock apears to be less risky and, when comparing its historical volatility, Evolution AB is 1.72 times less risky than Media. The stock trades about -0.11 of its potential returns per unit of risk. The Media and Games is currently generating about 0.16 of returns per unit of risk over similar time horizon. If you would invest 3,515 in Media and Games on November 8, 2024 and sell it today you would earn a total of 485.00 from holding Media and Games or generate 13.8% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 95.65% |
| Values | Daily Returns |
Evolution AB vs. Media and Games
Performance |
| Timeline |
| Evolution AB |
| Media and Games |
Evolution and Media Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Evolution and Media
The main advantage of trading using opposite Evolution and Media positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Evolution position performs unexpectedly, 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 Media will offset losses from the drop in Media's long position.| Evolution vs. Embracer Group AB | Evolution vs. Sinch AB | Evolution vs. Kambi Group PLC | Evolution vs. Samhllsbyggnadsbolaget i Norden |
| Media vs. Embracer Group AB | Media vs. Samhllsbyggnadsbolaget i Norden | Media vs. Sinch AB | Media vs. Zaptec AS |
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 Money Managers module to screen money managers from public funds and ETFs managed around the world.
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