Correlation Between Movie Studio and Seven Arts
Can any of the company-specific risk be diversified away by investing in both Movie Studio and Seven Arts 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 Movie Studio and Seven Arts into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Movie Studio and Seven Arts Entertainment, you can compare the effects of market volatilities on Movie Studio and Seven Arts 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 Movie Studio with a short position of Seven Arts. Check out your portfolio center. Please also check ongoing floating volatility patterns of Movie Studio and Seven Arts.
Diversification Opportunities for Movie Studio and Seven Arts
-0.03 | Correlation Coefficient |
Good diversification
The 3 months correlation between Movie and Seven is -0.03. Overlapping area represents the amount of risk that can be diversified away by holding Movie Studio and Seven Arts Entertainment in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Seven Arts Entertainment and Movie Studio 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 Movie Studio are associated (or correlated) with Seven Arts. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Seven Arts Entertainment has no effect on the direction of Movie Studio i.e., Movie Studio and Seven Arts go up and down completely randomly.
Pair Corralation between Movie Studio and Seven Arts
Given the investment horizon of 90 days Movie Studio is expected to generate 1.66 times more return on investment than Seven Arts. However, Movie Studio is 1.66 times more volatile than Seven Arts Entertainment. It trades about 0.1 of its potential returns per unit of risk. Seven Arts Entertainment is currently generating about 0.08 per unit of risk. If you would invest 0.20 in Movie Studio on August 26, 2024 and sell it today you would lose (0.09) from holding Movie Studio or give up 45.0% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 99.6% |
| Values | Daily Returns |
Movie Studio vs. Seven Arts Entertainment
Performance |
| Timeline |
| Movie Studio |
| Seven Arts Entertainment |
Movie Studio and Seven Arts Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Movie Studio and Seven Arts
The main advantage of trading using opposite Movie Studio and Seven Arts positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Movie Studio position performs unexpectedly, Seven Arts 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 Seven Arts will offset losses from the drop in Seven Arts' long position.| Movie Studio vs. Roku Inc | Movie Studio vs. SNM Gobal Holdings | Movie Studio vs. Seven Arts Entertainment | Movie Studio vs. All For One |
| Seven Arts vs. HUMANA INC | Seven Arts vs. SCOR PK | Seven Arts vs. Aquagold International | Seven Arts vs. Barloworld Ltd ADR |
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 Portfolio Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.
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