Correlation Between ASSOC BR and MOVIE GAMES

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

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

Diversification Opportunities for ASSOC BR and MOVIE GAMES

0.26

Correlation Coefficient

ASSOC BR  MOVIE GAMES

Modest diversification

The 3 months correlation between ASSOC and MOVIE is 0.26. Overlapping area represents the amount of risk that can be diversified away by holding ASSOC BR FOODS 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 ASSOC BR 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 ASSOC BR FOODS 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 ASSOC BR i.e., ASSOC BR and MOVIE GAMES go up and down completely randomly.

Pair Corralation between ASSOC BR and MOVIE GAMES

Assuming the 90 days trading horizon ASSOC BR FOODS is expected to under-perform the MOVIE GAMES. But the stock apears to be less risky and, when comparing its historical volatility, ASSOC BR FOODS is 2.38 times less risky than MOVIE GAMES. The stock trades about -0.12 of its potential returns per unit of risk. The MOVIE GAMES SA is currently generating about -0.01 of returns per unit of risk over similar time horizon. If you would invest  411.00  in MOVIE GAMES SA on October 20, 2024 and sell it today you would lose (28.00) from holding MOVIE GAMES SA or give up 6.81% of portfolio value over 90 days.

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

ASSOC BR FOODS  vs.  MOVIE GAMES SA

ASSOC BR FOODS

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days ASSOC BR FOODS 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 February 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

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 nearly stable basic indicators, MOVIE GAMES is not utilizing all of its potentials. The newest stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with ASSOC BR and MOVIE GAMES

The main advantage of trading using opposite ASSOC BR and MOVIE GAMES positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ASSOC BR 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 ASSOC BR FOODS 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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.