Correlation Between Nasmedia and Stic Investments

Can any of the company-specific risk be diversified away by investing in both Nasmedia and Stic Investments 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 Nasmedia and Stic Investments into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Nasmedia Co and Stic Investments, you can compare the effects of market volatilities on Nasmedia and Stic Investments 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 Nasmedia with a short position of Stic Investments. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nasmedia and Stic Investments.

Diversification Opportunities for Nasmedia and Stic Investments

0.33

Correlation Coefficient

Nasmedia  Stic Investments

Weak diversification

The 3 months correlation between Nasmedia and Stic is 0.33. Overlapping area represents the amount of risk that can be diversified away by holding Nasmedia Co and Stic Investments in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Stic Investments and Nasmedia 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 Nasmedia Co are associated (or correlated) with Stic Investments. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Stic Investments has no effect on the direction of Nasmedia i.e., Nasmedia and Stic Investments go up and down completely randomly.

Pair Corralation between Nasmedia and Stic Investments

Assuming the 90 days trading horizon Nasmedia Co is expected to under-perform the Stic Investments. But the stock apears to be less risky and, when comparing its historical volatility, Nasmedia Co is 1.5 times less risky than Stic Investments. The stock trades about -0.05 of its potential returns per unit of risk. The Stic Investments is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest  799,000  in Stic Investments on September 13, 2024 and sell it today you would earn a total of  87,000  from holding Stic Investments or generate 10.89% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

Nasmedia Co  vs.  Stic Investments

Nasmedia

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Nasmedia Co has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Nasmedia is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Stic Investments

Risk-Adjusted Performance

6 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Stic Investments are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Stic Investments sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Nasmedia and Stic Investments

The main advantage of trading using opposite Nasmedia and Stic Investments positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Nasmedia position performs unexpectedly, Stic Investments 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 Stic Investments will offset losses from the drop in Stic Investments' long position.

The idea behind Nasmedia Co and Stic Investments 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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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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..