Correlation Between DONTNOD Entertainment and Broadpeak

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

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

Diversification Opportunities for DONTNOD Entertainment and Broadpeak

0.86

Correlation Coefficient

DONTNOD Entertainment  Broadpeak

Very poor diversification

The 3 months correlation between DONTNOD and Broadpeak is 0.86. Overlapping area represents the amount of risk that can be diversified away by holding DONTNOD Entertainment SA and Broadpeak SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Broadpeak SA and DONTNOD 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 DONTNOD Entertainment SA are associated (or correlated) with Broadpeak. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Broadpeak SA has no effect on the direction of DONTNOD Entertainment i.e., DONTNOD Entertainment and Broadpeak go up and down completely randomly.

Pair Corralation between DONTNOD Entertainment and Broadpeak

Assuming the 90 days trading horizon DONTNOD Entertainment SA is expected to generate 1.79 times more return on investment than Broadpeak. However, DONTNOD Entertainment is 1.79 times more volatile than Broadpeak SA. It trades about -0.09 of its potential returns per unit of risk. Broadpeak SA is currently generating about -0.28 per unit of risk. If you would invest  173.00  in DONTNOD Entertainment SA on September 14, 2024 and sell it today you would lose (61.00) from holding DONTNOD Entertainment SA or give up 35.26% of portfolio value over 90 days.

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

DONTNOD Entertainment SA  vs.  Broadpeak SA

DONTNOD Entertainment

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days DONTNOD Entertainment SA has generated negative risk-adjusted returns adding no value to investors with long positions. Even with weak performance in the last few months, the Stock's basic indicators remain relatively invariable which may send shares a bit higher in January 2025. The latest agitation may also be a sign of long-running up-swing for the enterprise retail investors.

Broadpeak SA

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Broadpeak SA has generated negative risk-adjusted returns adding no value to investors with long positions. Even with weak performance in the last few months, the Stock's basic indicators remain relatively invariable which may send shares a bit higher in January 2025. The latest agitation may also be a sign of long-running up-swing for the enterprise retail investors.

Pair Trading with DONTNOD Entertainment and Broadpeak

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

The idea behind DONTNOD Entertainment SA and Broadpeak 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.

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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.