Correlation Between ADX and Movie Games
Can any of the company-specific risk be diversified away by investing in both ADX and Movie Games 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 ADX and Movie Games into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between ADX and Movie Games SA, you can compare the effects of market volatilities on ADX and Movie Games 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 ADX with a short position of Movie Games. Check out your portfolio center. Please also check ongoing floating volatility patterns of ADX and Movie Games.
Diversification Opportunities for ADX and Movie Games
0.62 | Correlation Coefficient |
Poor diversification
The 3 months correlation between ADX and Movie is 0.62. Overlapping area represents the amount of risk that can be diversified away by holding ADX and Movie Games SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Movie Games SA and ADX 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 ADX are associated (or correlated) with Movie Games. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Movie Games SA has no effect on the direction of ADX i.e., ADX and Movie Games go up and down completely randomly.
Pair Corralation between ADX and Movie Games
Assuming the 90 days trading horizon ADX is expected to generate 1.4 times more return on investment than Movie Games. However, ADX is 1.4 times more volatile than Movie Games SA. It trades about -0.06 of its potential returns per unit of risk. Movie Games SA is currently generating about -0.13 per unit of risk. If you would invest 40.00 in ADX on September 2, 2024 and sell it today you would lose (14.00) from holding ADX or give up 35.0% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 88.19% |
| Values | Daily Returns |
ADX vs. Movie Games SA
Performance |
| Timeline |
| ADX |
| Movie Games SA |
ADX and Movie Games Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ADX and Movie Games
The main advantage of trading using opposite ADX and Movie Games positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ADX position performs unexpectedly, Movie Games 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 Movie Games will offset losses from the drop in Movie Games' long position.The idea behind ADX and Movie Games SA 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.| Movie Games vs. Medicofarma Biotech SA | Movie Games vs. Creotech Instruments SA | Movie Games vs. Alior Bank SA | Movie Games vs. Cloud Technologies SA |
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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.
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