Correlation Between MOVIE GAMES and BP Prudhoe

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

Diversification Opportunities for MOVIE GAMES and BP Prudhoe

0.74

Correlation Coefficient

MOVIE GAMES  BP Prudhoe

Poor diversification

The 3 months correlation between MOVIE and BMI is 0.74. Overlapping area represents the amount of risk that can be diversified away by holding MOVIE GAMES SA and BP Prudhoe Bay in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BP Prudhoe Bay 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 BP Prudhoe. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BP Prudhoe Bay has no effect on the direction of MOVIE GAMES i.e., MOVIE GAMES and BP Prudhoe go up and down completely randomly.

Pair Corralation between MOVIE GAMES and BP Prudhoe

Assuming the 90 days horizon MOVIE GAMES SA is expected to generate 0.48 times more return on investment than BP Prudhoe. However, MOVIE GAMES SA is 2.1 times less risky than BP Prudhoe. It trades about 0.08 of its potential returns per unit of risk. BP Prudhoe Bay is currently generating about -0.09 per unit of risk. If you would invest  346.00  in MOVIE GAMES SA on October 9, 2024 and sell it today you would earn a total of  20.00  from holding MOVIE GAMES SA or generate 5.78% return on investment over 90 days.

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

MOVIE GAMES SA  vs.  BP Prudhoe Bay

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.

BP Prudhoe Bay

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days BP Prudhoe Bay has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fragile 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.

Pair Trading with MOVIE GAMES and BP Prudhoe

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

The idea behind MOVIE GAMES SA and BP Prudhoe Bay 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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.