Correlation Between Alsea SAB and Network Media

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

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

Diversification Opportunities for Alsea SAB and Network Media

0.63

Correlation Coefficient

Alsea SAB  Network Media

Poor diversification

The 3 months correlation between Alsea and Network is 0.63. Overlapping area represents the amount of risk that can be diversified away by holding Alsea SAB de and Network Media Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Network Media Group and Alsea SAB 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 Alsea SAB de are associated (or correlated) with Network Media. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Network Media Group has no effect on the direction of Alsea SAB i.e., Alsea SAB and Network Media go up and down completely randomly.

Pair Corralation between Alsea SAB and Network Media

Assuming the 90 days horizon Alsea SAB is expected to generate 5.96 times less return on investment than Network Media. But when comparing it to its historical volatility, Alsea SAB de is 1.82 times less risky than Network Media. It trades about 0.01 of its potential returns per unit of risk. Network Media Group is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest  19.00  in Network Media Group on April 25, 2025 and sell it today you would lose (7.00) from holding Network Media Group or give up 36.84% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	74.85%
Values	Daily Returns

Alsea SAB de  vs.  Network Media Group

Alsea SAB de

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Alsea SAB de are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite nearly weak basic indicators, Alsea SAB reported solid returns over the last few months and may actually be approaching a breakup point.

Network Media Group

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Network Media Group are ranked lower than 21 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Network Media reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Alsea SAB and Network Media

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

The idea behind Alsea SAB de and Network Media Group 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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.