Correlation Between Next Mediaworks and Data Patterns

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

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

Diversification Opportunities for Next Mediaworks and Data Patterns

0.08

Correlation Coefficient

Next Mediaworks  Data Patterns

Significant diversification

The 3 months correlation between Next and Data is 0.08. Overlapping area represents the amount of risk that can be diversified away by holding Next Mediaworks Limited and Data Patterns Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Data Patterns Limited and Next Mediaworks 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 Next Mediaworks Limited are associated (or correlated) with Data Patterns. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Data Patterns Limited has no effect on the direction of Next Mediaworks i.e., Next Mediaworks and Data Patterns go up and down completely randomly.

Pair Corralation between Next Mediaworks and Data Patterns

Assuming the 90 days trading horizon Next Mediaworks Limited is expected to under-perform the Data Patterns. But the stock apears to be less risky and, when comparing its historical volatility, Next Mediaworks Limited is 2.3 times less risky than Data Patterns. The stock trades about -0.03 of its potential returns per unit of risk. The Data Patterns Limited is currently generating about 0.26 of returns per unit of risk over similar time horizon. If you would invest  164,270  in Data Patterns Limited on April 6, 2025 and sell it today you would earn a total of  133,880  from holding Data Patterns Limited or generate 81.5% return on investment over 90 days.

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

Next Mediaworks Limited  vs.  Data Patterns Limited

Next Mediaworks

Risk-Adjusted Performance

Very Weak

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

Data Patterns Limited

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Data Patterns Limited are ranked lower than 20 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unsteady basic indicators, Data Patterns unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Next Mediaworks and Data Patterns

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

The idea behind Next Mediaworks Limited and Data Patterns Limited 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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.