Correlation Between Take Two and Centaur Media

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

By analyzing existing cross correlation between Take Two Interactive Software and Centaur Media, you can compare the effects of market volatilities on Take Two and Centaur Media 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 Take Two with a short position of Centaur Media. Check out your portfolio center. Please also check ongoing floating volatility patterns of Take Two and Centaur Media.

Diversification Opportunities for Take Two and Centaur Media

0.27

Correlation Coefficient

Take Two  Centaur Media

Modest diversification

The 3 months correlation between Take and Centaur is 0.27. Overlapping area represents the amount of risk that can be diversified away by holding Take Two Interactive Software and Centaur Media in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Centaur Media and Take Two 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 Take Two Interactive Software are associated (or correlated) with Centaur Media. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Centaur Media has no effect on the direction of Take Two i.e., Take Two and Centaur Media go up and down completely randomly.

Pair Corralation between Take Two and Centaur Media

Assuming the 90 days trading horizon Take Two is expected to generate 1.23 times less return on investment than Centaur Media. But when comparing it to its historical volatility, Take Two Interactive Software is 1.3 times less risky than Centaur Media. It trades about 0.1 of its potential returns per unit of risk. Centaur Media is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest  2,300  in Centaur Media on December 30, 2024 and sell it today you would earn a total of  400.00  from holding Centaur Media or generate 17.39% return on investment over 90 days.

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

Take Two Interactive Software  vs.  Centaur Media

Take Two Interactive

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Take Two Interactive Software are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak basic indicators, Take Two unveiled solid returns over the last few months and may actually be approaching a breakup point.

Centaur Media

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Centaur Media are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of rather uncertain technical and fundamental indicators, Centaur Media exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Take Two and Centaur Media

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

The idea behind Take Two Interactive Software and Centaur Media 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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.