Correlation Between Holiday Entertainment and CVC Technologies
Can any of the company-specific risk be diversified away by investing in both Holiday Entertainment and CVC Technologies 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 Holiday Entertainment and CVC Technologies into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Holiday Entertainment Co and CVC Technologies, you can compare the effects of market volatilities on Holiday Entertainment and CVC Technologies 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 Holiday Entertainment with a short position of CVC Technologies. Check out your portfolio center. Please also check ongoing floating volatility patterns of Holiday Entertainment and CVC Technologies.
Diversification Opportunities for Holiday Entertainment and CVC Technologies
-0.58 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Holiday and CVC is -0.58. Overlapping area represents the amount of risk that can be diversified away by holding Holiday Entertainment Co and CVC Technologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CVC Technologies and Holiday Entertainment 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 Holiday Entertainment Co are associated (or correlated) with CVC Technologies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CVC Technologies has no effect on the direction of Holiday Entertainment i.e., Holiday Entertainment and CVC Technologies go up and down completely randomly.
Pair Corralation between Holiday Entertainment and CVC Technologies
Assuming the 90 days trading horizon Holiday Entertainment Co is expected to generate 0.4 times more return on investment than CVC Technologies. However, Holiday Entertainment Co is 2.53 times less risky than CVC Technologies. It trades about -0.14 of its potential returns per unit of risk. CVC Technologies is currently generating about -0.25 per unit of risk. If you would invest 7,870 in Holiday Entertainment Co on November 8, 2024 and sell it today you would lose (110.00) from holding Holiday Entertainment Co or give up 1.4% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Holiday Entertainment Co vs. CVC Technologies
Performance |
| Timeline |
| Holiday Entertainment |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
| CVC Technologies |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Modest
Holiday Entertainment and CVC Technologies Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Holiday Entertainment and CVC Technologies
The main advantage of trading using opposite Holiday Entertainment and CVC Technologies positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Holiday Entertainment position performs unexpectedly, CVC Technologies 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 CVC Technologies will offset losses from the drop in CVC Technologies' long position.The idea behind Holiday Entertainment Co and CVC Technologies 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.Check out your portfolio center.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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.
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