Correlation Between Seven Arts and New Wave
Can any of the company-specific risk be diversified away by investing in both Seven Arts 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 Seven Arts and New Wave into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Seven Arts Entertainment and New Wave Holdings, you can compare the effects of market volatilities on Seven Arts 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 Seven Arts with a short position of New Wave. Check out your portfolio center. Please also check ongoing floating volatility patterns of Seven Arts and New Wave.
Diversification Opportunities for Seven Arts and New Wave
0.29 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Seven and New is 0.29. Overlapping area represents the amount of risk that can be diversified away by holding Seven Arts 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 Seven Arts 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 Seven Arts 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 Seven Arts i.e., Seven Arts and New Wave go up and down completely randomly.
Pair Corralation between Seven Arts and New Wave
Given the investment horizon of 90 days Seven Arts Entertainment is expected to generate 1.0 times more return on investment than New Wave. However, Seven Arts is 1.0 times more volatile than New Wave Holdings. It trades about 0.16 of its potential returns per unit of risk. New Wave Holdings is currently generating about 0.06 per unit of risk. If you would invest 0.03 in Seven Arts Entertainment on September 14, 2024 and sell it today you would earn a total of 0.01 from holding Seven Arts Entertainment or generate 33.33% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 95.45% |
| Values | Daily Returns |
Seven Arts Entertainment vs. New Wave Holdings
Performance |
| Timeline |
| Seven Arts Entertainment |
| New Wave Holdings |
Seven Arts and New Wave Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Seven Arts and New Wave
The main advantage of trading using opposite Seven Arts and New Wave positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Seven Arts 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.| Seven Arts vs. Papaya Growth Opportunity | Seven Arts vs. HUMANA INC | Seven Arts vs. Barloworld Ltd ADR | Seven Arts vs. Morningstar Unconstrained Allocation |
| New Wave vs. ZoomerMedia Limited | New Wave vs. OverActive Media Corp | New Wave vs. Network Media Group | New Wave vs. Celtic plc |
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 Stocks Directory module to find actively traded stocks across global markets.
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