Correlation Between MilDef Group and Media
Can any of the company-specific risk be diversified away by investing in both MilDef Group 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 MilDef Group and Media into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between MilDef Group AB and Media and Games, you can compare the effects of market volatilities on MilDef Group 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 MilDef Group with a short position of Media. Check out your portfolio center. Please also check ongoing floating volatility patterns of MilDef Group and Media.
Diversification Opportunities for MilDef Group and Media
0.7 | Correlation Coefficient |
Poor diversification
The 3 months correlation between MilDef and Media is 0.7. Overlapping area represents the amount of risk that can be diversified away by holding MilDef Group 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 MilDef 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 MilDef Group 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 MilDef Group i.e., MilDef Group and Media go up and down completely randomly.
Pair Corralation between MilDef Group and Media
Assuming the 90 days trading horizon MilDef Group is expected to generate 1.93 times less return on investment than Media. But when comparing it to its historical volatility, MilDef Group AB is 1.22 times less risky than Media. It trades about 0.04 of its potential returns per unit of risk. Media and Games is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest 1,690 in Media and Games on September 2, 2024 and sell it today you would earn a total of 2,290 from holding Media and Games or generate 135.5% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
MilDef Group AB vs. Media and Games
Performance |
| Timeline |
| MilDef Group AB |
| Media and Games |
MilDef Group and Media Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with MilDef Group and Media
The main advantage of trading using opposite MilDef Group and Media positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if MilDef Group 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.The idea behind MilDef Group AB and Media and Games pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| Media vs. MilDef Group AB | Media vs. Fractal Gaming Group | Media vs. KABE Group AB | Media vs. IAR Systems Group |
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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.
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