Correlation Between Media Prima and Asia Media

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

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

Diversification Opportunities for Media Prima and Asia Media

0.24

Correlation Coefficient

Media Prima  Asia Media

Modest diversification

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

Pair Corralation between Media Prima and Asia Media

Assuming the 90 days trading horizon Media Prima is expected to generate 1.12 times less return on investment than Asia Media. But when comparing it to its historical volatility, Media Prima Bhd is 2.4 times less risky than Asia Media. It trades about 0.03 of its potential returns per unit of risk. Asia Media Group is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest  15.00  in Asia Media Group on September 14, 2024 and sell it today you would lose (5.50) from holding Asia Media Group or give up 36.67% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	99.59%
Values	Daily Returns

Media Prima Bhd  vs.  Asia Media Group

Media Prima Bhd

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Media Prima Bhd has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent basic indicators, Media Prima is not utilizing all of its potentials. The latest stock price mess, may contribute to short-term losses for the institutional investors.

Asia Media Group

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Asia Media Group are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting basic indicators, Asia Media disclosed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Media Prima and Asia Media

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

The idea behind Media Prima Bhd and Asia Media Group 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 Commodity Directory module to find actively traded commodities issued by global exchanges.