Correlation Between System and Cube Entertainment

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

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

Diversification Opportunities for System and Cube Entertainment

-0.19

Correlation Coefficient

System  Cube Entertainment

Good diversification

The 3 months correlation between System and Cube is -0.19. Overlapping area represents the amount of risk that can be diversified away by holding System and Application and Cube Entertainment in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cube Entertainment and System 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 System and Application are associated (or correlated) with Cube Entertainment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cube Entertainment has no effect on the direction of System i.e., System and Cube Entertainment go up and down completely randomly.

Pair Corralation between System and Cube Entertainment

Assuming the 90 days trading horizon System and Application is expected to under-perform the Cube Entertainment. But the stock apears to be less risky and, when comparing its historical volatility, System and Application is 1.09 times less risky than Cube Entertainment. The stock trades about -0.09 of its potential returns per unit of risk. The Cube Entertainment is currently generating about 0.0 of returns per unit of risk over similar time horizon. If you would invest  1,642,000  in Cube Entertainment on September 12, 2024 and sell it today you would lose (182,000) from holding Cube Entertainment or give up 11.08% of portfolio value over 90 days.

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

System and Application  vs.  Cube Entertainment

System and Application

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days System and Application has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, System is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Cube Entertainment

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Cube Entertainment has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Cube Entertainment is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with System and Cube Entertainment

The main advantage of trading using opposite System and Cube Entertainment positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if System position performs unexpectedly, Cube Entertainment 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 Cube Entertainment will offset losses from the drop in Cube Entertainment's long position.

The idea behind System and Application and Cube Entertainment 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.

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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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.