Correlation Between Peoples Educational and National CineMedia
Can any of the company-specific risk be diversified away by investing in both Peoples Educational and National CineMedia 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 Peoples Educational and National CineMedia into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Peoples Educational Holdings and National CineMedia, you can compare the effects of market volatilities on Peoples Educational and National CineMedia 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 Peoples Educational with a short position of National CineMedia. Check out your portfolio center. Please also check ongoing floating volatility patterns of Peoples Educational and National CineMedia.
Diversification Opportunities for Peoples Educational and National CineMedia
-0.36 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Peoples and National is -0.36. Overlapping area represents the amount of risk that can be diversified away by holding Peoples Educational Holdings and National CineMedia in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on National CineMedia and Peoples Educational 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 Peoples Educational Holdings are associated (or correlated) with National CineMedia. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of National CineMedia has no effect on the direction of Peoples Educational i.e., Peoples Educational and National CineMedia go up and down completely randomly.
Pair Corralation between Peoples Educational and National CineMedia
Given the investment horizon of 90 days Peoples Educational Holdings is expected to generate 6.02 times more return on investment than National CineMedia. However, Peoples Educational is 6.02 times more volatile than National CineMedia. It trades about 0.05 of its potential returns per unit of risk. National CineMedia is currently generating about 0.06 per unit of risk. If you would invest 0.01 in Peoples Educational Holdings on September 12, 2024 and sell it today you would earn a total of 0.99 from holding Peoples Educational Holdings or generate 9900.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 97.17% |
| Values | Daily Returns |
Peoples Educational Holdings vs. National CineMedia
Performance |
| Timeline |
| Peoples Educational |
| National CineMedia |
Peoples Educational and National CineMedia Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Peoples Educational and National CineMedia
The main advantage of trading using opposite Peoples Educational and National CineMedia positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Peoples Educational position performs unexpectedly, National CineMedia 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 National CineMedia will offset losses from the drop in National CineMedia's long position.| Peoples Educational vs. Papaya Growth Opportunity | Peoples Educational vs. HUMANA INC | Peoples Educational vs. Barloworld Ltd ADR | Peoples Educational vs. Morningstar Unconstrained Allocation |
| National CineMedia vs. MGO Global Common | National CineMedia vs. Baosheng Media Group | National CineMedia vs. Glory Star New | National CineMedia vs. Impact Fusion International |
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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.
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