Correlation Between SAMG Entertainment and Next Entertainment

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

By analyzing existing cross correlation between SAMG Entertainment Co and Next Entertainment World, you can compare the effects of market volatilities on SAMG Entertainment and Next Entertainment 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 SAMG Entertainment with a short position of Next Entertainment. Check out your portfolio center. Please also check ongoing floating volatility patterns of SAMG Entertainment and Next Entertainment.

Diversification Opportunities for SAMG Entertainment and Next Entertainment

0.25

Correlation Coefficient

SAMG Entertainment  Next Entertainment

Modest diversification

The 3 months correlation between SAMG and Next is 0.25. Overlapping area represents the amount of risk that can be diversified away by holding SAMG Entertainment Co and Next Entertainment World in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Next Entertainment World and SAMG Entertainment 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 SAMG Entertainment Co are associated (or correlated) with Next Entertainment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Next Entertainment World has no effect on the direction of SAMG Entertainment i.e., SAMG Entertainment and Next Entertainment go up and down completely randomly.

Pair Corralation between SAMG Entertainment and Next Entertainment

Assuming the 90 days trading horizon SAMG Entertainment Co is expected to generate 1.19 times more return on investment than Next Entertainment. However, SAMG Entertainment is 1.19 times more volatile than Next Entertainment World. It trades about 0.22 of its potential returns per unit of risk. Next Entertainment World is currently generating about -0.03 per unit of risk. If you would invest  1,136,000  in SAMG Entertainment Co on September 12, 2024 and sell it today you would earn a total of  245,000  from holding SAMG Entertainment Co or generate 21.57% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	95.65%
Values	Daily Returns

SAMG Entertainment Co  vs.  Next Entertainment World

SAMG Entertainment

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days SAMG Entertainment Co has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain somewhat strong which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Next Entertainment World

Risk-Adjusted Performance

1 of 100

Very Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Next Entertainment World are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, Next Entertainment is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with SAMG Entertainment and Next Entertainment

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

The idea behind SAMG Entertainment Co and Next Entertainment World 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.