Correlation Between MOVIE GAMES and First Solar

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

Diversification Opportunities for MOVIE GAMES and First Solar

0.5

Correlation Coefficient

MOVIE GAMES  First Solar

Very weak diversification

The 3 months correlation between MOVIE and First is 0.5. Overlapping area represents the amount of risk that can be diversified away by holding MOVIE GAMES SA and First Solar in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on First Solar 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 First Solar. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of First Solar has no effect on the direction of MOVIE GAMES i.e., MOVIE GAMES and First Solar go up and down completely randomly.

Pair Corralation between MOVIE GAMES and First Solar

Assuming the 90 days horizon MOVIE GAMES SA is expected to under-perform the First Solar. But the stock apears to be less risky and, when comparing its historical volatility, MOVIE GAMES SA is 1.2 times less risky than First Solar. The stock trades about -0.06 of its potential returns per unit of risk. The First Solar is currently generating about -0.02 of returns per unit of risk over similar time horizon. If you would invest  20,555  in First Solar on October 9, 2024 and sell it today you would lose (1,775) from holding First Solar or give up 8.64% of portfolio value over 90 days.

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

MOVIE GAMES SA  vs.  First Solar

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.

First Solar

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with MOVIE GAMES and First Solar

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

The idea behind MOVIE GAMES SA and First Solar 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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.