Correlation Between Photomyne and Creative Media

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

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

Diversification Opportunities for Photomyne and Creative Media

-0.38

Correlation Coefficient

Photomyne  Creative Media

Very good diversification

The 3 months correlation between Photomyne and Creative is -0.38. Overlapping area represents the amount of risk that can be diversified away by holding Photomyne and Creative Media Community in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Creative Media Community and Photomyne 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 Photomyne are associated (or correlated) with Creative Media. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Creative Media Community has no effect on the direction of Photomyne i.e., Photomyne and Creative Media go up and down completely randomly.

Pair Corralation between Photomyne and Creative Media

Assuming the 90 days trading horizon Photomyne is expected to generate 1.71 times more return on investment than Creative Media. However, Photomyne is 1.71 times more volatile than Creative Media Community. It trades about -0.15 of its potential returns per unit of risk. Creative Media Community is currently generating about -0.28 per unit of risk. If you would invest  222,500  in Photomyne on March 28, 2024 and sell it today you would lose (7,900) from holding Photomyne or give up 3.55% of portfolio value over 90 days.

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

Photomyne  vs.  Creative Media Community

Photomyne

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Photomyne has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain somewhat strong which may send shares a bit higher in July 2024. The current disturbance may also be a sign of long term up-swing for the company investors.

Creative Media Community

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Creative Media Community has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Pair Trading with Photomyne and Creative Media

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

The idea behind Photomyne and Creative Media Community 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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.