Correlation Between Innovativ Media and Pegasystems

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

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

Diversification Opportunities for Innovativ Media and Pegasystems

0.43

Correlation Coefficient

Innovativ Media  Pegasystems

Very weak diversification

The 3 months correlation between Innovativ and Pegasystems is 0.43. Overlapping area represents the amount of risk that can be diversified away by holding Innovativ Media Group and Pegasystems in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pegasystems and Innovativ 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 Innovativ Media Group are associated (or correlated) with Pegasystems. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pegasystems has no effect on the direction of Innovativ Media i.e., Innovativ Media and Pegasystems go up and down completely randomly.

Pair Corralation between Innovativ Media and Pegasystems

If you would invest  5,816  in Pegasystems on February 20, 2024 and sell it today you would earn a total of  597.00  from holding Pegasystems or generate 10.26% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	4.76%
Values	Daily Returns

Innovativ Media Group  vs.  Pegasystems

Innovativ Media Group

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Innovativ Media Group has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy basic indicators, Innovativ Media is not utilizing all of its potentials. The current stock price disarray, may contribute to short-term losses for the investors.

Pegasystems

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Pegasystems has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong technical and fundamental indicators, Pegasystems is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Innovativ Media and Pegasystems

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

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