Correlation Between LBG Media and Gear4music (Holdings)
Can any of the company-specific risk be diversified away by investing in both LBG Media and Gear4music (Holdings) 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 LBG Media and Gear4music (Holdings) into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between LBG Media PLC and Gear4music Plc, you can compare the effects of market volatilities on LBG Media and Gear4music (Holdings) 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 LBG Media with a short position of Gear4music (Holdings). Check out your portfolio center. Please also check ongoing floating volatility patterns of LBG Media and Gear4music (Holdings).
Diversification Opportunities for LBG Media and Gear4music (Holdings)
0.47 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between LBG and Gear4music is 0.47. Overlapping area represents the amount of risk that can be diversified away by holding LBG Media PLC and Gear4music Plc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gear4music (Holdings) and LBG 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 LBG Media PLC are associated (or correlated) with Gear4music (Holdings). Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Gear4music (Holdings) has no effect on the direction of LBG Media i.e., LBG Media and Gear4music (Holdings) go up and down completely randomly.
Pair Corralation between LBG Media and Gear4music (Holdings)
Assuming the 90 days trading horizon LBG Media PLC is expected to under-perform the Gear4music (Holdings). In addition to that, LBG Media is 2.54 times more volatile than Gear4music Plc. It trades about -0.22 of its total potential returns per unit of risk. Gear4music Plc is currently generating about -0.19 per unit of volatility. If you would invest 15,250 in Gear4music Plc on November 29, 2024 and sell it today you would lose (750.00) from holding Gear4music Plc or give up 4.92% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
LBG Media PLC vs. Gear4music Plc
Performance |
| Timeline |
| LBG Media PLC |
| Gear4music (Holdings) |
LBG Media and Gear4music (Holdings) Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with LBG Media and Gear4music (Holdings)
The main advantage of trading using opposite LBG Media and Gear4music (Holdings) positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if LBG Media position performs unexpectedly, Gear4music (Holdings) 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 Gear4music (Holdings) will offset losses from the drop in Gear4music (Holdings)'s long position.| LBG Media vs. Verizon Communications | LBG Media vs. Cairo Communication SpA | LBG Media vs. United Internet AG | LBG Media vs. Zegona Communications Plc |
| Gear4music (Holdings) vs. Fonix Mobile plc | Gear4music (Holdings) vs. mobilezone holding AG | Gear4music (Holdings) vs. Symphony Environmental Technologies | Gear4music (Holdings) vs. Veolia Environnement VE |
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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.
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