Correlation Between Network Media and Cogstate

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

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

Diversification Opportunities for Network Media and Cogstate

0.26

Correlation Coefficient

Network Media  Cogstate

Modest diversification

The 3 months correlation between Network and Cogstate is 0.26. Overlapping area represents the amount of risk that can be diversified away by holding Network Media Group and Cogstate Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cogstate Limited and Network 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 Network Media Group are associated (or correlated) with Cogstate. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cogstate Limited has no effect on the direction of Network Media i.e., Network Media and Cogstate go up and down completely randomly.

Pair Corralation between Network Media and Cogstate

Assuming the 90 days horizon Network Media Group is expected to generate 1.67 times more return on investment than Cogstate. However, Network Media is 1.67 times more volatile than Cogstate Limited. It trades about 0.27 of its potential returns per unit of risk. Cogstate Limited is currently generating about 0.14 per unit of risk. If you would invest  4.25  in Network Media Group on April 28, 2025 and sell it today you would earn a total of  7.75  from holding Network Media Group or generate 182.35% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	98.44%
Values	Daily Returns

Network Media Group  vs.  Cogstate Limited

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.

Cogstate Limited

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Cogstate Limited are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Cogstate reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Network Media and Cogstate

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

The idea behind Network Media Group and Cogstate 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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.