Correlation Between Informa Plc and Schibsted ASA

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

By analyzing existing cross correlation between Informa plc and Schibsted ASA ADR, you can compare the effects of market volatilities on Informa Plc and Schibsted ASA 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 Informa Plc with a short position of Schibsted ASA. Check out your portfolio center. Please also check ongoing floating volatility patterns of Informa Plc and Schibsted ASA.

Diversification Opportunities for Informa Plc and Schibsted ASA

-0.5

Correlation Coefficient

Informa Plc  Schibsted ASA

Very good diversification

The 3 months correlation between Informa and Schibsted is -0.5. Overlapping area represents the amount of risk that can be diversified away by holding Informa plc and Schibsted ASA ADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Schibsted ASA ADR and Informa Plc 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 Informa plc are associated (or correlated) with Schibsted ASA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Schibsted ASA ADR has no effect on the direction of Informa Plc i.e., Informa Plc and Schibsted ASA go up and down completely randomly.

Pair Corralation between Informa Plc and Schibsted ASA

Assuming the 90 days horizon Informa Plc is expected to generate 6.54 times less return on investment than Schibsted ASA. But when comparing it to its historical volatility, Informa plc is 1.13 times less risky than Schibsted ASA. It trades about 0.02 of its potential returns per unit of risk. Schibsted ASA ADR is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest  2,978  in Schibsted ASA ADR on September 5, 2024 and sell it today you would earn a total of  582.00  from holding Schibsted ASA ADR or generate 19.54% return on investment over 90 days.

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

Informa plc  vs.  Schibsted ASA ADR

Informa plc

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Informa plc are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable forward-looking indicators, Informa Plc is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Schibsted ASA ADR

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Schibsted ASA ADR are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of fairly uncertain basic indicators, Schibsted ASA showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Informa Plc and Schibsted ASA

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

The idea behind Informa plc and Schibsted ASA ADR 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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.