Correlation Between Modern Times and Cyber Security

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Can any of the company-specific risk be diversified away by investing in both Modern Times and Cyber Security 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 Modern Times and Cyber Security into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Modern Times Group and Cyber Security 1, you can compare the effects of market volatilities on Modern Times and Cyber Security 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 Modern Times with a short position of Cyber Security. Check out your portfolio center. Please also check ongoing floating volatility patterns of Modern Times and Cyber Security.

Diversification Opportunities for Modern Times and Cyber Security

-0.78
  Correlation Coefficient

Pay attention - limited upside

The 3 months correlation between Modern and Cyber is -0.78. Overlapping area represents the amount of risk that can be diversified away by holding Modern Times Group and Cyber Security 1 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cyber Security 1 and Modern Times 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 Modern Times Group are associated (or correlated) with Cyber Security. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cyber Security 1 has no effect on the direction of Modern Times i.e., Modern Times and Cyber Security go up and down completely randomly.

Pair Corralation between Modern Times and Cyber Security

Assuming the 90 days trading horizon Modern Times Group is expected to generate 0.36 times more return on investment than Cyber Security. However, Modern Times Group is 2.8 times less risky than Cyber Security. It trades about 0.25 of its potential returns per unit of risk. Cyber Security 1 is currently generating about -0.2 per unit of risk. If you would invest  7,750  in Modern Times Group on September 24, 2024 and sell it today you would earn a total of  1,700  from holding Modern Times Group or generate 21.94% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthWeak
Accuracy100.0%
ValuesDaily Returns

Modern Times Group  vs.  Cyber Security 1

 Performance 
       Timeline  
Modern Times Group 

Risk-Adjusted Performance

15 of 100

 
Weak
 
Strong
Good
Compared to the overall equity markets, risk-adjusted returns on investments in Modern Times Group are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Modern Times unveiled solid returns over the last few months and may actually be approaching a breakup point.
Cyber Security 1 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days Cyber Security 1 has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in January 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Modern Times and Cyber Security Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Modern Times and Cyber Security

The main advantage of trading using opposite Modern Times and Cyber Security positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Modern Times position performs unexpectedly, Cyber Security 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 Cyber Security will offset losses from the drop in Cyber Security's long position.
The idea behind Modern Times Group and Cyber Security 1 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.
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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.

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