Correlation Between ESE Entertainment and New Wave
Can any of the company-specific risk be diversified away by investing in both ESE Entertainment and New Wave 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 ESE Entertainment and New Wave into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between ESE Entertainment and New Wave Holdings, you can compare the effects of market volatilities on ESE Entertainment and New Wave 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 ESE Entertainment with a short position of New Wave. Check out your portfolio center. Please also check ongoing floating volatility patterns of ESE Entertainment and New Wave.
Diversification Opportunities for ESE Entertainment and New Wave
0.27 | Correlation Coefficient |
Modest diversification
The 3 months correlation between ESE and New is 0.27. Overlapping area represents the amount of risk that can be diversified away by holding ESE Entertainment and New Wave Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on New Wave Holdings and ESE 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 ESE Entertainment are associated (or correlated) with New Wave. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of New Wave Holdings has no effect on the direction of ESE Entertainment i.e., ESE Entertainment and New Wave go up and down completely randomly.
Pair Corralation between ESE Entertainment and New Wave
Assuming the 90 days horizon ESE Entertainment is expected to under-perform the New Wave. But the otc stock apears to be less risky and, when comparing its historical volatility, ESE Entertainment is 3.11 times less risky than New Wave. The otc stock trades about -0.13 of its potential returns per unit of risk. The New Wave Holdings is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest 1.09 in New Wave Holdings on September 3, 2024 and sell it today you would earn a total of 0.12 from holding New Wave Holdings or generate 11.01% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 95.24% |
| Values | Daily Returns |
ESE Entertainment vs. New Wave Holdings
Performance |
| Timeline |
| ESE Entertainment |
| New Wave Holdings |
ESE Entertainment and New Wave Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ESE Entertainment and New Wave
The main advantage of trading using opposite ESE Entertainment and New Wave positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ESE Entertainment position performs unexpectedly, New Wave 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 New Wave will offset losses from the drop in New Wave's long position.| ESE Entertainment vs. New Wave Holdings | ESE Entertainment vs. ZoomerMedia Limited | ESE Entertainment vs. OverActive Media Corp | ESE Entertainment vs. Network Media Group |
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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.
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