Correlation Between Network18 Media and Diligent MediaLimited

Can any of the company-specific risk be diversified away by investing in both Network18 Media and Diligent MediaLimited 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 Network18 Media and Diligent MediaLimited into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Network18 Media Investments and Diligent Media, you can compare the effects of market volatilities on Network18 Media and Diligent MediaLimited 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 Network18 Media with a short position of Diligent MediaLimited. Check out your portfolio center. Please also check ongoing floating volatility patterns of Network18 Media and Diligent MediaLimited.

Diversification Opportunities for Network18 Media and Diligent MediaLimited

0.6

Correlation Coefficient

Network18 Media  Diligent MediaLimited

Poor diversification

The 3 months correlation between Network18 and Diligent is 0.6. Overlapping area represents the amount of risk that can be diversified away by holding Network18 Media Investments and Diligent Media in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Diligent MediaLimited and Network18 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 Network18 Media Investments are associated (or correlated) with Diligent MediaLimited. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Diligent MediaLimited has no effect on the direction of Network18 Media i.e., Network18 Media and Diligent MediaLimited go up and down completely randomly.

Pair Corralation between Network18 Media and Diligent MediaLimited

Assuming the 90 days trading horizon Network18 Media Investments is expected to generate 1.16 times more return on investment than Diligent MediaLimited. However, Network18 Media is 1.16 times more volatile than Diligent Media. It trades about 0.13 of its potential returns per unit of risk. Diligent Media is currently generating about 0.03 per unit of risk. If you would invest  4,376  in Network18 Media Investments on April 14, 2025 and sell it today you would earn a total of  1,105  from holding Network18 Media Investments or generate 25.25% return on investment over 90 days.

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

Network18 Media Investments  vs.  Diligent Media

Network18 Media Inve

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Network18 Media Investments are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite quite uncertain forward-looking signals, Network18 Media disclosed solid returns over the last few months and may actually be approaching a breakup point.

Diligent MediaLimited

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Diligent Media are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite fairly strong fundamental indicators, Diligent MediaLimited is not utilizing all of its potentials. The recent stock price confusion, may contribute to short-horizon losses for the traders.

Pair Trading with Network18 Media and Diligent MediaLimited

The main advantage of trading using opposite Network18 Media and Diligent MediaLimited positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Network18 Media position performs unexpectedly, Diligent MediaLimited 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 Diligent MediaLimited will offset losses from the drop in Diligent MediaLimited's long position.

The idea behind Network18 Media Investments and Diligent 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.

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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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.