Correlation Between CG Hi and Cube Entertainment

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

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

Diversification Opportunities for CG Hi and Cube Entertainment

0.13

Correlation Coefficient

CG Hi  Cube Entertainment

Average diversification

The 3 months correlation between 264660 and Cube is 0.13. Overlapping area represents the amount of risk that can be diversified away by holding CG Hi Tech and Cube Entertainment in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cube Entertainment and CG Hi 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 CG Hi Tech 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 CG Hi i.e., CG Hi and Cube Entertainment go up and down completely randomly.

Pair Corralation between CG Hi and Cube Entertainment

Assuming the 90 days trading horizon CG Hi Tech is expected to generate 1.65 times more return on investment than Cube Entertainment. However, CG Hi is 1.65 times more volatile than Cube Entertainment. It trades about 0.17 of its potential returns per unit of risk. Cube Entertainment is currently generating about 0.01 per unit of risk. If you would invest  924,932  in CG Hi Tech on December 3, 2024 and sell it today you would earn a total of  498,068  from holding CG Hi Tech or generate 53.85% return on investment over 90 days.

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

CG Hi Tech  vs.  Cube Entertainment

CG Hi Tech

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in CG Hi Tech are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, CG Hi sustained solid returns over the last few months and may actually be approaching a breakup point.

Cube Entertainment

Risk-Adjusted Performance

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 CG Hi and Cube Entertainment

The main advantage of trading using opposite CG Hi and Cube Entertainment positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CG Hi 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 CG Hi Tech 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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.