Correlation Between Media and PERENNIAL ENERGY

Can any of the company-specific risk be diversified away by investing in both Media and PERENNIAL ENERGY 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 PERENNIAL ENERGY 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 PERENNIAL ENERGY HD 01, you can compare the effects of market volatilities on Media and PERENNIAL ENERGY 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 PERENNIAL ENERGY. Check out your portfolio center. Please also check ongoing floating volatility patterns of Media and PERENNIAL ENERGY.

Diversification Opportunities for Media and PERENNIAL ENERGY

0.49

Correlation Coefficient

Media  PERENNIAL ENERGY

Very weak diversification

The 3 months correlation between Media and PERENNIAL is 0.49. Overlapping area represents the amount of risk that can be diversified away by holding Media and Games and PERENNIAL ENERGY HD 01 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PERENNIAL ENERGY 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 PERENNIAL ENERGY. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PERENNIAL ENERGY has no effect on the direction of Media i.e., Media and PERENNIAL ENERGY go up and down completely randomly.

Pair Corralation between Media and PERENNIAL ENERGY

Assuming the 90 days trading horizon Media and Games is expected to under-perform the PERENNIAL ENERGY. But the stock apears to be less risky and, when comparing its historical volatility, Media and Games is 1.05 times less risky than PERENNIAL ENERGY. The stock trades about -0.04 of its potential returns per unit of risk. The PERENNIAL ENERGY HD 01 is currently generating about -0.02 of returns per unit of risk over similar time horizon. If you would invest  11.00  in PERENNIAL ENERGY HD 01 on September 30, 2024 and sell it today you would lose (1.00) from holding PERENNIAL ENERGY HD 01 or give up 9.09% of portfolio value over 90 days.

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

Media and Games  vs.  PERENNIAL ENERGY HD 01

Media and Games

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Media and Games has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest uncertain performance, the Stock's technical and fundamental indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

PERENNIAL ENERGY

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days PERENNIAL ENERGY HD 01 has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, PERENNIAL ENERGY is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Media and PERENNIAL ENERGY

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

The idea behind Media and Games and PERENNIAL ENERGY HD 01 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.