Correlation Between Coloray International and Cube Entertainment

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

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

Diversification Opportunities for Coloray International and Cube Entertainment

-0.67

Correlation Coefficient

Coloray International  Cube Entertainment

Excellent diversification

The 3 months correlation between Coloray and Cube is -0.67. Overlapping area represents the amount of risk that can be diversified away by holding Coloray International Investme and Cube Entertainment in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cube Entertainment and Coloray International 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 Coloray International Investment are associated (or correlated) with Cube Entertainment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cube Entertainment has no effect on the direction of Coloray International i.e., Coloray International and Cube Entertainment go up and down completely randomly.

Pair Corralation between Coloray International and Cube Entertainment

Assuming the 90 days trading horizon Coloray International Investment is expected to under-perform the Cube Entertainment. But the stock apears to be less risky and, when comparing its historical volatility, Coloray International Investment is 1.71 times less risky than Cube Entertainment. The stock trades about -0.06 of its potential returns per unit of risk. The Cube Entertainment is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest  1,580,000  in Cube Entertainment on September 27, 2024 and sell it today you would earn a total of  29,000  from holding Cube Entertainment or generate 1.84% return on investment over 90 days.

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

Coloray International Investme  vs.  Cube Entertainment

Coloray International

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Coloray International Investment 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.

Cube Entertainment

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Cube Entertainment are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Cube Entertainment sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Coloray International and Cube Entertainment

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

The idea behind Coloray International Investment and Cube Entertainment 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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.