Correlation Between Saga Communications and Salem Media

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

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

Diversification Opportunities for Saga Communications and Salem Media

0.47

Correlation Coefficient

Saga Communications  Salem Media

Very weak diversification

The 3 months correlation between Saga and Salem is 0.47. Overlapping area represents the amount of risk that can be diversified away by holding Saga Communications and Salem Media Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Salem Media Group and Saga Communications 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 Saga Communications are associated (or correlated) with Salem Media. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Salem Media Group has no effect on the direction of Saga Communications i.e., Saga Communications and Salem Media go up and down completely randomly.

Pair Corralation between Saga Communications and Salem Media

If you would invest  98.00  in Salem Media Group on August 25, 2024 and sell it today you would earn a total of  0.00  from holding Salem Media Group or generate 0.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	0.44%
Values	Daily Returns

Saga Communications  vs.  Salem Media Group

Saga Communications

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Saga Communications has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's technical and fundamental indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Salem Media Group

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Salem Media Group has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy essential indicators, Salem Media is not utilizing all of its potentials. The current stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Saga Communications and Salem Media

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

The idea behind Saga Communications and Salem 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 Equity Valuation module to check real value of public entities based on technical and fundamental data.