Correlation Between XLMedia PLC and Magnora ASA

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

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

Diversification Opportunities for XLMedia PLC and Magnora ASA

-0.03

Correlation Coefficient

XLMedia PLC  Magnora ASA

Good diversification

The 3 months correlation between XLMedia and Magnora is -0.03. Overlapping area represents the amount of risk that can be diversified away by holding XLMedia PLC and Magnora ASA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Magnora ASA and XLMedia PLC 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 XLMedia PLC are associated (or correlated) with Magnora ASA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Magnora ASA has no effect on the direction of XLMedia PLC i.e., XLMedia PLC and Magnora ASA go up and down completely randomly.

Pair Corralation between XLMedia PLC and Magnora ASA

Assuming the 90 days trading horizon XLMedia PLC is expected to generate 1.24 times more return on investment than Magnora ASA. However, XLMedia PLC is 1.24 times more volatile than Magnora ASA. It trades about 0.04 of its potential returns per unit of risk. Magnora ASA is currently generating about 0.03 per unit of risk. If you would invest  735.00  in XLMedia PLC on September 25, 2024 and sell it today you would earn a total of  185.00  from holding XLMedia PLC or generate 25.17% return on investment over 90 days.

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

XLMedia PLC  vs.  Magnora ASA

XLMedia PLC

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days XLMedia PLC has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound technical and fundamental indicators, XLMedia PLC is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Magnora ASA

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Magnora ASA are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Magnora ASA unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with XLMedia PLC and Magnora ASA

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

The idea behind XLMedia PLC and Magnora ASA 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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.