Correlation Between ATRESMEDIA and Townsquare Media

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

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

Diversification Opportunities for ATRESMEDIA and Townsquare Media

-0.14

Correlation Coefficient

ATRESMEDIA  Townsquare Media

Good diversification

The 3 months correlation between ATRESMEDIA and Townsquare is -0.14. Overlapping area represents the amount of risk that can be diversified away by holding ATRESMEDIA and Townsquare Media in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Townsquare Media and ATRESMEDIA 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 ATRESMEDIA are associated (or correlated) with Townsquare Media. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Townsquare Media has no effect on the direction of ATRESMEDIA i.e., ATRESMEDIA and Townsquare Media go up and down completely randomly.

Pair Corralation between ATRESMEDIA and Townsquare Media

Assuming the 90 days trading horizon ATRESMEDIA is expected to generate 45.27 times less return on investment than Townsquare Media. But when comparing it to its historical volatility, ATRESMEDIA is 1.86 times less risky than Townsquare Media. It trades about 0.0 of its potential returns per unit of risk. Townsquare Media is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest  905.00  in Townsquare Media on September 4, 2024 and sell it today you would earn a total of  20.00  from holding Townsquare Media or generate 2.21% return on investment over 90 days.

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

ATRESMEDIA  vs.  Townsquare Media

ATRESMEDIA

Risk-Adjusted Performance

0 of 100

Very Weak

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

Townsquare Media

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Townsquare Media are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, Townsquare Media is not utilizing all of its potentials. The latest stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with ATRESMEDIA and Townsquare Media

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

The idea behind ATRESMEDIA and Townsquare Media 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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.