Correlation Between MFE Mediaforeurope and Squirrel Media

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Can any of the company-specific risk be diversified away by investing in both MFE Mediaforeurope and Squirrel 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 MFE Mediaforeurope and Squirrel Media into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between MFE Mediaforeurope NV and Squirrel Media SA, you can compare the effects of market volatilities on MFE Mediaforeurope and Squirrel 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 MFE Mediaforeurope with a short position of Squirrel Media. Check out your portfolio center. Please also check ongoing floating volatility patterns of MFE Mediaforeurope and Squirrel Media.

Diversification Opportunities for MFE Mediaforeurope and Squirrel Media

0.55
  Correlation Coefficient

Very weak diversification

The 3 months correlation between MFE and Squirrel is 0.55. Overlapping area represents the amount of risk that can be diversified away by holding MFE Mediaforeurope NV and Squirrel Media SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Squirrel Media SA and MFE Mediaforeurope 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 MFE Mediaforeurope NV are associated (or correlated) with Squirrel Media. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Squirrel Media SA has no effect on the direction of MFE Mediaforeurope i.e., MFE Mediaforeurope and Squirrel Media go up and down completely randomly.

Pair Corralation between MFE Mediaforeurope and Squirrel Media

Assuming the 90 days trading horizon MFE Mediaforeurope NV is expected to generate 0.92 times more return on investment than Squirrel Media. However, MFE Mediaforeurope NV is 1.08 times less risky than Squirrel Media. It trades about 0.0 of its potential returns per unit of risk. Squirrel Media SA is currently generating about -0.05 per unit of risk. If you would invest  282.00  in MFE Mediaforeurope NV on April 24, 2025 and sell it today you would lose (3.00) from holding MFE Mediaforeurope NV or give up 1.06% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthWeak
Accuracy100.0%
ValuesDaily Returns

MFE Mediaforeurope NV  vs.  Squirrel Media SA

 Performance 
       Timeline  
MFE Mediaforeurope 

Risk-Adjusted Performance

Very Weak

 
Weak
 
Strong
Over the last 90 days MFE Mediaforeurope NV has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound fundamental indicators, MFE Mediaforeurope is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.
Squirrel Media SA 

Risk-Adjusted Performance

Very Weak

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

MFE Mediaforeurope and Squirrel Media Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with MFE Mediaforeurope and Squirrel Media

The main advantage of trading using opposite MFE Mediaforeurope and Squirrel Media positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if MFE Mediaforeurope position performs unexpectedly, Squirrel 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 Squirrel Media will offset losses from the drop in Squirrel Media's long position.
The idea behind MFE Mediaforeurope NV and Squirrel Media SA 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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.

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