Correlation Between Mirriad Advertising and CyberAgent

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

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

Diversification Opportunities for Mirriad Advertising and CyberAgent

0.27

Correlation Coefficient

Mirriad Advertising  CyberAgent

Modest diversification

The 3 months correlation between Mirriad and CyberAgent is 0.27. Overlapping area represents the amount of risk that can be diversified away by holding Mirriad Advertising plc and CyberAgent ADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CyberAgent ADR and Mirriad Advertising 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 Mirriad Advertising plc are associated (or correlated) with CyberAgent. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CyberAgent ADR has no effect on the direction of Mirriad Advertising i.e., Mirriad Advertising and CyberAgent go up and down completely randomly.

Pair Corralation between Mirriad Advertising and CyberAgent

Assuming the 90 days horizon Mirriad Advertising plc is expected to under-perform the CyberAgent. In addition to that, Mirriad Advertising is 3.02 times more volatile than CyberAgent ADR. It trades about -0.18 of its total potential returns per unit of risk. CyberAgent ADR is currently generating about 0.01 per unit of volatility. If you would invest  314.00  in CyberAgent ADR on September 2, 2024 and sell it today you would lose (1.00) from holding CyberAgent ADR or give up 0.32% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	98.46%
Values	Daily Returns

Mirriad Advertising plc  vs.  CyberAgent ADR

Mirriad Advertising plc

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Mirriad Advertising plc has generated negative risk-adjusted returns adding no value to investors with long positions. Despite unsteady performance in the last few months, the Stock's fundamental indicators remain nearly stable which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

CyberAgent ADR

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Mirriad Advertising and CyberAgent

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

The idea behind Mirriad Advertising plc and CyberAgent 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.

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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.