Correlation Between Media and Salzgitter
Can any of the company-specific risk be diversified away by investing in both Media and Salzgitter 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 Media and Salzgitter into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Media and Games and Salzgitter AG, you can compare the effects of market volatilities on Media and Salzgitter 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 Media with a short position of Salzgitter. Check out your portfolio center. Please also check ongoing floating volatility patterns of Media and Salzgitter.
Diversification Opportunities for Media and Salzgitter
0.66 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Media and Salzgitter is 0.66. Overlapping area represents the amount of risk that can be diversified away by holding Media and Games and Salzgitter AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Salzgitter AG and 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 Media and Games are associated (or correlated) with Salzgitter. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Salzgitter AG has no effect on the direction of Media i.e., Media and Salzgitter go up and down completely randomly.
Pair Corralation between Media and Salzgitter
Assuming the 90 days trading horizon Media and Games is expected to generate 1.3 times more return on investment than Salzgitter. However, Media is 1.3 times more volatile than Salzgitter AG. It trades about 0.06 of its potential returns per unit of risk. Salzgitter AG is currently generating about -0.02 per unit of risk. If you would invest 166.00 in Media and Games on September 4, 2024 and sell it today you would earn a total of 187.00 from holding Media and Games or generate 112.65% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Media and Games vs. Salzgitter AG
Performance |
| Timeline |
| Media and Games |
| Salzgitter AG |
Media and Salzgitter Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Media and Salzgitter
The main advantage of trading using opposite Media and Salzgitter positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Media position performs unexpectedly, Salzgitter 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 Salzgitter will offset losses from the drop in Salzgitter's long position.| Media vs. Rocket Internet SE | Media vs. Superior Plus Corp | Media vs. NMI Holdings | Media vs. Origin Agritech |
| Salzgitter vs. ARROW ELECTRONICS | Salzgitter vs. DIVERSIFIED ROYALTY | Salzgitter vs. KIMBALL ELECTRONICS | Salzgitter vs. Richardson Electronics |
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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.
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