Correlation Between MOVIE GAMES and Retail Estates

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

Diversification Opportunities for MOVIE GAMES and Retail Estates

0.87

Correlation Coefficient

MOVIE GAMES  Retail Estates

Very poor diversification

The 3 months correlation between MOVIE and Retail is 0.87. Overlapping area represents the amount of risk that can be diversified away by holding MOVIE GAMES SA and Retail Estates NV in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Retail Estates NV 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 Retail Estates. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Retail Estates NV has no effect on the direction of MOVIE GAMES i.e., MOVIE GAMES and Retail Estates go up and down completely randomly.

Pair Corralation between MOVIE GAMES and Retail Estates

Assuming the 90 days horizon MOVIE GAMES is expected to generate 1.6 times less return on investment than Retail Estates. In addition to that, MOVIE GAMES is 3.02 times more volatile than Retail Estates NV. It trades about 0.01 of its total potential returns per unit of risk. Retail Estates NV is currently generating about 0.03 per unit of volatility. If you would invest  4,967  in Retail Estates NV on September 28, 2024 and sell it today you would earn a total of  813.00  from holding Retail Estates NV or generate 16.37% return on investment over 90 days.

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

MOVIE GAMES SA  vs.  Retail Estates NV

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 January 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Retail Estates NV

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Retail Estates NV 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 January 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Pair Trading with MOVIE GAMES and Retail Estates

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

The idea behind MOVIE GAMES SA and Retail Estates NV 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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.