Correlation Between Paramount Communications and Infomedia Press
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By analyzing existing cross correlation between Paramount Communications Limited and Infomedia Press Limited, you can compare the effects of market volatilities on Paramount Communications and Infomedia Press 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 Paramount Communications with a short position of Infomedia Press. Check out your portfolio center. Please also check ongoing floating volatility patterns of Paramount Communications and Infomedia Press.
Diversification Opportunities for Paramount Communications and Infomedia Press
0.51 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Paramount and Infomedia is 0.51. Overlapping area represents the amount of risk that can be diversified away by holding Paramount Communications Limit and Infomedia Press Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Infomedia Press and Paramount Communications 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 Paramount Communications Limited are associated (or correlated) with Infomedia Press. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Infomedia Press has no effect on the direction of Paramount Communications i.e., Paramount Communications and Infomedia Press go up and down completely randomly.
Pair Corralation between Paramount Communications and Infomedia Press
Assuming the 90 days trading horizon Paramount Communications Limited is expected to under-perform the Infomedia Press. In addition to that, Paramount Communications is 1.08 times more volatile than Infomedia Press Limited. It trades about -0.32 of its total potential returns per unit of risk. Infomedia Press Limited is currently generating about -0.17 per unit of volatility. If you would invest 749.00 in Infomedia Press Limited on October 30, 2024 and sell it today you would lose (73.00) from holding Infomedia Press Limited or give up 9.75% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Paramount Communications Limit vs. Infomedia Press Limited
Performance |
| Timeline |
| Paramount Communications |
| Infomedia Press |
Paramount Communications and Infomedia Press Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Paramount Communications and Infomedia Press
The main advantage of trading using opposite Paramount Communications and Infomedia Press positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Paramount Communications position performs unexpectedly, Infomedia Press 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 Infomedia Press will offset losses from the drop in Infomedia Press' long position.The idea behind Paramount Communications Limited and Infomedia Press Limited 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.
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