Correlation Between DC Media and MediaZen

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

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

Diversification Opportunities for DC Media and MediaZen

0.24

Correlation Coefficient

DC Media  MediaZen

Modest diversification

The 3 months correlation between 263720 and MediaZen is 0.24. Overlapping area represents the amount of risk that can be diversified away by holding DC Media Co and MediaZen in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MediaZen and DC 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 DC Media Co are associated (or correlated) with MediaZen. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MediaZen has no effect on the direction of DC Media i.e., DC Media and MediaZen go up and down completely randomly.

Pair Corralation between DC Media and MediaZen

Assuming the 90 days trading horizon DC Media is expected to generate 1.03 times less return on investment than MediaZen. In addition to that, DC Media is 2.51 times more volatile than MediaZen. It trades about 0.08 of its total potential returns per unit of risk. MediaZen is currently generating about 0.22 per unit of volatility. If you would invest  966,000  in MediaZen on September 22, 2024 and sell it today you would earn a total of  164,000  from holding MediaZen or generate 16.98% return on investment over 90 days.

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

DC Media Co  vs.  MediaZen

DC Media

Risk-Adjusted Performance

6 of 100

Modest

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

MediaZen

Risk-Adjusted Performance

17 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in MediaZen are ranked lower than 17 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, MediaZen sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with DC Media and MediaZen

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

The idea behind DC Media Co and MediaZen 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 Portfolio Center module to all portfolio management and optimization tools to improve performance of your portfolios.