Correlation Between MOVIE GAMES and Graphic Packaging

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

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

Diversification Opportunities for MOVIE GAMES and Graphic Packaging

-0.47

Correlation Coefficient

MOVIE GAMES  Graphic Packaging

Very good diversification

The 3 months correlation between MOVIE and Graphic is -0.47. Overlapping area represents the amount of risk that can be diversified away by holding MOVIE GAMES SA and Graphic Packaging Holding in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Graphic Packaging Holding and MOVIE GAMES 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 MOVIE GAMES SA are associated (or correlated) with Graphic Packaging. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Graphic Packaging Holding has no effect on the direction of MOVIE GAMES i.e., MOVIE GAMES and Graphic Packaging go up and down completely randomly.

Pair Corralation between MOVIE GAMES and Graphic Packaging

Assuming the 90 days horizon MOVIE GAMES SA is expected to generate 2.54 times more return on investment than Graphic Packaging. However, MOVIE GAMES is 2.54 times more volatile than Graphic Packaging Holding. It trades about 0.15 of its potential returns per unit of risk. Graphic Packaging Holding is currently generating about -0.07 per unit of risk. If you would invest  297.00  in MOVIE GAMES SA on December 20, 2024 and sell it today you would earn a total of  111.00  from holding MOVIE GAMES SA or generate 37.37% return on investment over 90 days.

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

MOVIE GAMES SA  vs.  Graphic Packaging Holding

MOVIE GAMES SA

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in MOVIE GAMES SA are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, MOVIE GAMES reported solid returns over the last few months and may actually be approaching a breakup point.

Graphic Packaging Holding

Risk-Adjusted Performance

Very Weak

Over the last 90 days Graphic Packaging Holding has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest fragile performance, the Stock's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Pair Trading with MOVIE GAMES and Graphic Packaging

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

The idea behind MOVIE GAMES SA and Graphic Packaging Holding 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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.