Correlation Between Gevelot and Media 6

Can any of the company-specific risk be diversified away by investing in both Gevelot and Media 6 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 Gevelot and Media 6 into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Gevelot and Media 6 SA, you can compare the effects of market volatilities on Gevelot and Media 6 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 Gevelot with a short position of Media 6. Check out your portfolio center. Please also check ongoing floating volatility patterns of Gevelot and Media 6.

Diversification Opportunities for Gevelot and Media 6

-0.42

Correlation Coefficient

Gevelot  Media 6

Very good diversification

The 3 months correlation between Gevelot and Media is -0.42. Overlapping area represents the amount of risk that can be diversified away by holding Gevelot and Media 6 SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Media 6 SA and Gevelot 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 Gevelot are associated (or correlated) with Media 6. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Media 6 SA has no effect on the direction of Gevelot i.e., Gevelot and Media 6 go up and down completely randomly.

Pair Corralation between Gevelot and Media 6

Assuming the 90 days trading horizon Gevelot is expected to under-perform the Media 6. But the stock apears to be less risky and, when comparing its historical volatility, Gevelot is 3.46 times less risky than Media 6. The stock trades about -0.03 of its potential returns per unit of risk. The Media 6 SA is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest  1,040  in Media 6 SA on September 5, 2024 and sell it today you would earn a total of  170.00  from holding Media 6 SA or generate 16.35% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	98.46%
Values	Daily Returns

Gevelot  vs.  Media 6 SA

Gevelot

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Gevelot has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable basic indicators, Gevelot is not utilizing all of its potentials. The current stock price agitation, may contribute to short-term losses for the retail investors.

Media 6 SA

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Media 6 SA are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak forward indicators, Media 6 sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Gevelot and Media 6

The main advantage of trading using opposite Gevelot and Media 6 positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Gevelot position performs unexpectedly, Media 6 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 Media 6 will offset losses from the drop in Media 6's long position.

The idea behind Gevelot and Media 6 SA 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 Portfolio Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.