Correlation Between Media and Klpierre

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

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

Diversification Opportunities for Media and Klpierre

-0.32

Correlation Coefficient

Media  Klpierre

Very good diversification

The 3 months correlation between Media and Klpierre is -0.32. Overlapping area represents the amount of risk that can be diversified away by holding Media and Games and Klpierre SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Klpierre SA and 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 Media and Games are associated (or correlated) with Klpierre. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Klpierre SA has no effect on the direction of Media i.e., Media and Klpierre go up and down completely randomly.

Pair Corralation between Media and Klpierre

Assuming the 90 days trading horizon Media and Games is expected to generate 3.51 times more return on investment than Klpierre. However, Media is 3.51 times more volatile than Klpierre SA. It trades about 0.09 of its potential returns per unit of risk. Klpierre SA is currently generating about 0.06 per unit of risk. If you would invest  122.00  in Media and Games on September 13, 2024 and sell it today you would earn a total of  221.00  from holding Media and Games or generate 181.15% return on investment over 90 days.

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

Media and Games  vs.  Klpierre SA

Media and Games

Risk-Adjusted Performance

2 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Media and Games are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unsteady technical and fundamental indicators, Media may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Klpierre SA

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Klpierre SA has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Klpierre is not utilizing all of its potentials. The newest stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Media and Klpierre

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

The idea behind Media and Games and Klpierre 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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.