Correlation Between Marchex and VS Media

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

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

Diversification Opportunities for Marchex and VS Media

-0.11

Correlation Coefficient

Marchex  VS Media

Good diversification

The 3 months correlation between Marchex and VSME is -0.11. Overlapping area represents the amount of risk that can be diversified away by holding Marchex and VS Media Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on VS Media Holdings and Marchex 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 Marchex are associated (or correlated) with VS Media. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of VS Media Holdings has no effect on the direction of Marchex i.e., Marchex and VS Media go up and down completely randomly.

Pair Corralation between Marchex and VS Media

Given the investment horizon of 90 days Marchex is expected to generate 50.97 times less return on investment than VS Media. But when comparing it to its historical volatility, Marchex is 6.5 times less risky than VS Media. It trades about 0.01 of its potential returns per unit of risk. VS Media Holdings is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest  89.00  in VS Media Holdings on August 30, 2024 and sell it today you would earn a total of  30.00  from holding VS Media Holdings or generate 33.71% return on investment over 90 days.

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

Marchex  vs.  VS Media Holdings

Marchex

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Marchex has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong technical indicators, Marchex is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

VS Media Holdings

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in VS Media Holdings are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of rather fragile primary indicators, VS Media exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Marchex and VS Media

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

The idea behind Marchex and VS Media Holdings 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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.