Correlation Between Seven West and MOVIE GAMES
Can any of the company-specific risk be diversified away by investing in both Seven West 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 Seven West and MOVIE GAMES into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Seven West Media and MOVIE GAMES SA, you can compare the effects of market volatilities on Seven West 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 Seven West with a short position of MOVIE GAMES. Check out your portfolio center. Please also check ongoing floating volatility patterns of Seven West and MOVIE GAMES.
Diversification Opportunities for Seven West and MOVIE GAMES
0.78 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Seven and MOVIE is 0.78. Overlapping area represents the amount of risk that can be diversified away by holding Seven West Media 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 Seven West 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 West Media 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 Seven West i.e., Seven West and MOVIE GAMES go up and down completely randomly.
Pair Corralation between Seven West and MOVIE GAMES
Assuming the 90 days horizon Seven West Media is expected to generate 1.48 times more return on investment than MOVIE GAMES. However, Seven West is 1.48 times more volatile than MOVIE GAMES SA. It trades about -0.02 of its potential returns per unit of risk. MOVIE GAMES SA is currently generating about -0.07 per unit of risk. If you would invest 14.00 in Seven West Media on September 15, 2024 and sell it today you would lose (6.35) from holding Seven West Media or give up 45.36% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Seven West Media vs. MOVIE GAMES SA
Performance |
| Timeline |
| Seven West Media |
| MOVIE GAMES SA |
Seven West and MOVIE GAMES Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Seven West and MOVIE GAMES
The main advantage of trading using opposite Seven West and MOVIE GAMES positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Seven West 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's long position.| Seven West vs. Live Nation Entertainment | Seven West vs. Toho Co | Seven West vs. Superior Plus Corp | Seven West vs. NMI Holdings |
| MOVIE GAMES vs. MELIA HOTELS | MOVIE GAMES vs. PPHE HOTEL GROUP | MOVIE GAMES vs. Summit Hotel Properties | MOVIE GAMES vs. Fast Retailing Co |
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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.
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