Correlation Between COAST ENTERTAINMENT and IDP Education

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

By analyzing existing cross correlation between COAST ENTERTAINMENT HOLDINGS and IDP Education, you can compare the effects of market volatilities on COAST ENTERTAINMENT and IDP Education 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 COAST ENTERTAINMENT with a short position of IDP Education. Check out your portfolio center. Please also check ongoing floating volatility patterns of COAST ENTERTAINMENT and IDP Education.

Diversification Opportunities for COAST ENTERTAINMENT and IDP Education

-0.43

Correlation Coefficient

COAST ENTERTAINMENT  IDP Education

Very good diversification

The 3 months correlation between COAST and IDP is -0.43. Overlapping area represents the amount of risk that can be diversified away by holding COAST ENTERTAINMENT HOLDINGS and IDP Education in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on IDP Education and COAST 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 COAST ENTERTAINMENT HOLDINGS are associated (or correlated) with IDP Education. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of IDP Education has no effect on the direction of COAST ENTERTAINMENT i.e., COAST ENTERTAINMENT and IDP Education go up and down completely randomly.

Pair Corralation between COAST ENTERTAINMENT and IDP Education

Assuming the 90 days trading horizon COAST ENTERTAINMENT HOLDINGS is expected to generate 1.16 times more return on investment than IDP Education. However, COAST ENTERTAINMENT is 1.16 times more volatile than IDP Education. It trades about -0.01 of its potential returns per unit of risk. IDP Education is currently generating about -0.01 per unit of risk. If you would invest  49.00  in COAST ENTERTAINMENT HOLDINGS on October 22, 2024 and sell it today you would lose (3.00) from holding COAST ENTERTAINMENT HOLDINGS or give up 6.12% of portfolio value over 90 days.

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

COAST ENTERTAINMENT HOLDINGS  vs.  IDP Education

COAST ENTERTAINMENT

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days COAST ENTERTAINMENT HOLDINGS has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable technical indicators, COAST ENTERTAINMENT is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

IDP Education

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days IDP Education has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable essential indicators, IDP Education is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with COAST ENTERTAINMENT and IDP Education

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

The idea behind COAST ENTERTAINMENT HOLDINGS and IDP Education 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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.