Correlation Between Diligent Media and Manaksia Coated

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

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

Diversification Opportunities for Diligent Media and Manaksia Coated

0.63

Correlation Coefficient

Diligent Media  Manaksia Coated

Poor diversification

The 3 months correlation between Diligent and Manaksia is 0.63. Overlapping area represents the amount of risk that can be diversified away by holding Diligent Media and Manaksia Coated Metals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Manaksia Coated Metals and Diligent 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 Diligent Media are associated (or correlated) with Manaksia Coated. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Manaksia Coated Metals has no effect on the direction of Diligent Media i.e., Diligent Media and Manaksia Coated go up and down completely randomly.

Pair Corralation between Diligent Media and Manaksia Coated

Assuming the 90 days trading horizon Diligent Media is expected to generate 1.92 times less return on investment than Manaksia Coated. In addition to that, Diligent Media is 1.37 times more volatile than Manaksia Coated Metals. It trades about 0.17 of its total potential returns per unit of risk. Manaksia Coated Metals is currently generating about 0.45 per unit of volatility. If you would invest  5,921  in Manaksia Coated Metals on September 27, 2024 and sell it today you would earn a total of  4,467  from holding Manaksia Coated Metals or generate 75.44% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	97.67%
Values	Daily Returns

Diligent Media  vs.  Manaksia Coated Metals

Diligent Media

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Diligent Media are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite fairly uncertain fundamental indicators, Diligent Media may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Manaksia Coated Metals

Risk-Adjusted Performance

20 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Manaksia Coated Metals are ranked lower than 20 (%) of all global equities and portfolios over the last 90 days. In spite of very uncertain basic indicators, Manaksia Coated displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Diligent Media and Manaksia Coated

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

The idea behind Diligent Media and Manaksia Coated Metals 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 Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.