Correlation Between Blackline and MOVIE GAMES

Can any of the company-specific risk be diversified away by investing in both Blackline 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 Blackline and MOVIE GAMES into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Blackline and MOVIE GAMES SA, you can compare the effects of market volatilities on Blackline 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 Blackline with a short position of MOVIE GAMES. Check out your portfolio center. Please also check ongoing floating volatility patterns of Blackline and MOVIE GAMES.

Diversification Opportunities for Blackline and MOVIE GAMES

-0.75

Correlation Coefficient

Blackline  MOVIE GAMES

Pay attention - limited upside

The 3 months correlation between Blackline and MOVIE is -0.75. Overlapping area represents the amount of risk that can be diversified away by holding Blackline 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 Blackline 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 Blackline 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 Blackline i.e., Blackline and MOVIE GAMES go up and down completely randomly.

Pair Corralation between Blackline and MOVIE GAMES

Assuming the 90 days horizon Blackline is expected to generate 0.56 times more return on investment than MOVIE GAMES. However, Blackline is 1.79 times less risky than MOVIE GAMES. It trades about 0.16 of its potential returns per unit of risk. MOVIE GAMES SA is currently generating about -0.04 per unit of risk. If you would invest  4,540  in Blackline on October 24, 2024 and sell it today you would earn a total of  1,310  from holding Blackline or generate 28.85% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	100.0%
Values	Daily Returns

Blackline  vs.  MOVIE GAMES SA

Blackline

Risk-Adjusted Performance

7 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Blackline are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite nearly unsteady basic indicators, Blackline reported solid returns over the last few months and may actually be approaching a breakup point.

MOVIE GAMES SA

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in MOVIE GAMES SA are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, MOVIE GAMES is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Blackline and MOVIE GAMES

The main advantage of trading using opposite Blackline and MOVIE GAMES positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Blackline 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.

The idea behind Blackline and MOVIE GAMES SA pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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 Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.