Correlation Between VS Media and Nexters Warrant

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

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

Diversification Opportunities for VS Media and Nexters Warrant

-0.33

Correlation Coefficient

VS Media  Nexters Warrant

Very good diversification

The 3 months correlation between VSME and Nexters is -0.33. Overlapping area represents the amount of risk that can be diversified away by holding VS Media Holdings and Nexters Warrant in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nexters Warrant and VS 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 VS Media Holdings are associated (or correlated) with Nexters Warrant. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nexters Warrant has no effect on the direction of VS Media i.e., VS Media and Nexters Warrant go up and down completely randomly.

Pair Corralation between VS Media and Nexters Warrant

Given the investment horizon of 90 days VS Media Holdings is expected to generate 0.46 times more return on investment than Nexters Warrant. However, VS Media Holdings is 2.18 times less risky than Nexters Warrant. It trades about -0.02 of its potential returns per unit of risk. Nexters Warrant is currently generating about -0.35 per unit of risk. If you would invest  131.00  in VS Media Holdings on August 30, 2024 and sell it today you would lose (12.00) from holding VS Media Holdings or give up 9.16% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	60.87%
Values	Daily Returns

VS Media Holdings  vs.  Nexters Warrant

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.

Nexters Warrant

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Nexters Warrant are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. In spite of fairly uncertain basic indicators, Nexters Warrant showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with VS Media and Nexters Warrant

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

The idea behind VS Media Holdings and Nexters Warrant 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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.