Correlation Between Cube Entertainment and Nepes

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

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

Diversification Opportunities for Cube Entertainment and Nepes

0.07

Correlation Coefficient

Cube Entertainment  Nepes

Significant diversification

The 3 months correlation between Cube and Nepes is 0.07. Overlapping area represents the amount of risk that can be diversified away by holding Cube Entertainment and Nepes in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nepes and Cube Entertainment 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 Cube Entertainment are associated (or correlated) with Nepes. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nepes has no effect on the direction of Cube Entertainment i.e., Cube Entertainment and Nepes go up and down completely randomly.

Pair Corralation between Cube Entertainment and Nepes

Assuming the 90 days trading horizon Cube Entertainment is expected to generate 3.75 times less return on investment than Nepes. But when comparing it to its historical volatility, Cube Entertainment is 1.27 times less risky than Nepes. It trades about 0.03 of its potential returns per unit of risk. Nepes is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest  649,000  in Nepes on December 4, 2024 and sell it today you would earn a total of  100,000  from holding Nepes or generate 15.41% return on investment over 90 days.

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

Cube Entertainment  vs.  Nepes

Cube Entertainment

Risk-Adjusted Performance

Very Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Cube Entertainment are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. 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.

Nepes

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Nepes are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Nepes sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Cube Entertainment and Nepes

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

The idea behind Cube Entertainment and Nepes 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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.