Correlation Between AIB Group and MOVIE GAMES

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

By analyzing existing cross correlation between AIB Group plc and MOVIE GAMES SA, you can compare the effects of market volatilities on AIB Group and MOVIE GAMES 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 AIB Group with a short position of MOVIE GAMES. Check out your portfolio center. Please also check ongoing floating volatility patterns of AIB Group and MOVIE GAMES.

Diversification Opportunities for AIB Group and MOVIE GAMES

0.48

Correlation Coefficient

AIB Group  MOVIE GAMES

Very weak diversification

The 3 months correlation between AIB and MOVIE is 0.48. Overlapping area represents the amount of risk that can be diversified away by holding AIB Group plc and MOVIE GAMES SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MOVIE GAMES SA and AIB Group 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 AIB Group plc are associated (or correlated) with MOVIE GAMES. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MOVIE GAMES SA has no effect on the direction of AIB Group i.e., AIB Group and MOVIE GAMES go up and down completely randomly.

Pair Corralation between AIB Group and MOVIE GAMES

Assuming the 90 days horizon AIB Group is expected to generate 1.22 times less return on investment than MOVIE GAMES. But when comparing it to its historical volatility, AIB Group plc is 1.48 times less risky than MOVIE GAMES. It trades about 0.18 of its potential returns per unit of risk. MOVIE GAMES SA is currently generating about 0.15 of returns per unit of risk over similar time horizon. If you would invest  297.00  in MOVIE GAMES SA on December 20, 2024 and sell it today you would earn a total of  111.00  from holding MOVIE GAMES SA or generate 37.37% return on investment over 90 days.

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

AIB Group plc  vs.  MOVIE GAMES SA

AIB Group plc

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in AIB Group plc are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, AIB Group reported solid returns over the last few months and may actually be approaching a breakup point.

MOVIE GAMES SA

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in MOVIE GAMES SA are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, MOVIE GAMES reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with AIB Group and MOVIE GAMES

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

The idea behind AIB Group plc and MOVIE GAMES SA 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 Commodity Directory module to find actively traded commodities issued by global exchanges.