Correlation Between Global Mediacom and First Media

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

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

Diversification Opportunities for Global Mediacom and First Media

-0.88

Correlation Coefficient

Global Mediacom  First Media

Pay attention - limited upside

The 3 months correlation between Global and First is -0.88. Overlapping area represents the amount of risk that can be diversified away by holding Global Mediacom Tbk and First Media Tbk in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on First Media Tbk and Global Mediacom 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 Global Mediacom Tbk are associated (or correlated) with First Media. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of First Media Tbk has no effect on the direction of Global Mediacom i.e., Global Mediacom and First Media go up and down completely randomly.

Pair Corralation between Global Mediacom and First Media

Assuming the 90 days trading horizon Global Mediacom Tbk is expected to under-perform the First Media. But the stock apears to be less risky and, when comparing its historical volatility, Global Mediacom Tbk is 1.89 times less risky than First Media. The stock trades about -0.16 of its potential returns per unit of risk. The First Media Tbk is currently generating about 0.27 of returns per unit of risk over similar time horizon. If you would invest  6,100  in First Media Tbk on September 14, 2024 and sell it today you would earn a total of  3,400  from holding First Media Tbk or generate 55.74% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Significant
Accuracy	100.0%
Values	Daily Returns

Global Mediacom Tbk  vs.  First Media Tbk

Global Mediacom Tbk

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Global Mediacom Tbk has generated negative risk-adjusted returns adding no value to investors with long positions. Despite conflicting performance in the last few months, the Stock's forward-looking signals remain quite persistent which may send shares a bit higher in January 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

First Media Tbk

Risk-Adjusted Performance

21 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in First Media Tbk are ranked lower than 21 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting forward-looking signals, First Media disclosed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Global Mediacom and First Media

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

The idea behind Global Mediacom Tbk and First Media Tbk 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 Dashboard module to portfolio dashboard that provides centralized access to all your investments.