Correlation Between MOVIE GAMES and SIDETRADE

Can any of the company-specific risk be diversified away by investing in both MOVIE GAMES and SIDETRADE 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 SIDETRADE 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 SIDETRADE EO 1, you can compare the effects of market volatilities on MOVIE GAMES and SIDETRADE 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 SIDETRADE. Check out your portfolio center. Please also check ongoing floating volatility patterns of MOVIE GAMES and SIDETRADE.

Diversification Opportunities for MOVIE GAMES and SIDETRADE

0.18

Correlation Coefficient

MOVIE GAMES  SIDETRADE

Average diversification

The 3 months correlation between MOVIE and SIDETRADE is 0.18. Overlapping area represents the amount of risk that can be diversified away by holding MOVIE GAMES SA and SIDETRADE EO 1 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SIDETRADE EO 1 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 SIDETRADE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SIDETRADE EO 1 has no effect on the direction of MOVIE GAMES i.e., MOVIE GAMES and SIDETRADE go up and down completely randomly.

Pair Corralation between MOVIE GAMES and SIDETRADE

Assuming the 90 days horizon MOVIE GAMES SA is expected to under-perform the SIDETRADE. In addition to that, MOVIE GAMES is 1.84 times more volatile than SIDETRADE EO 1. It trades about -0.01 of its total potential returns per unit of risk. SIDETRADE EO 1 is currently generating about 0.05 per unit of volatility. If you would invest  15,200  in SIDETRADE EO 1 on October 4, 2024 and sell it today you would earn a total of  6,800  from holding SIDETRADE EO 1 or generate 44.74% return on investment over 90 days.

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

MOVIE GAMES SA  vs.  SIDETRADE EO 1

MOVIE GAMES SA

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days MOVIE GAMES SA has generated negative risk-adjusted returns adding no value to investors with long positions. Despite uncertain performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

SIDETRADE EO 1

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days SIDETRADE EO 1 has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, SIDETRADE is not utilizing all of its potentials. The newest stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with MOVIE GAMES and SIDETRADE

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

The idea behind MOVIE GAMES SA and SIDETRADE EO 1 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 Portfolio Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.