Correlation Between 51Talk Online and National CineMedia

Can any of the company-specific risk be diversified away by investing in both 51Talk Online and National CineMedia 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 51Talk Online and National CineMedia into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between 51Talk Online Education and National CineMedia, you can compare the effects of market volatilities on 51Talk Online and National CineMedia 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 51Talk Online with a short position of National CineMedia. Check out your portfolio center. Please also check ongoing floating volatility patterns of 51Talk Online and National CineMedia.

Diversification Opportunities for 51Talk Online and National CineMedia

-0.37

Correlation Coefficient

51Talk Online  National CineMedia

Very good diversification

The 3 months correlation between 51Talk and National is -0.37. Overlapping area represents the amount of risk that can be diversified away by holding 51Talk Online Education and National CineMedia in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on National CineMedia and 51Talk Online 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 51Talk Online Education are associated (or correlated) with National CineMedia. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of National CineMedia has no effect on the direction of 51Talk Online i.e., 51Talk Online and National CineMedia go up and down completely randomly.

Pair Corralation between 51Talk Online and National CineMedia

Considering the 90-day investment horizon 51Talk Online Education is expected to under-perform the National CineMedia. In addition to that, 51Talk Online is 1.68 times more volatile than National CineMedia. It trades about -0.03 of its total potential returns per unit of risk. National CineMedia is currently generating about 0.02 per unit of volatility. If you would invest  661.00  in National CineMedia on December 2, 2024 and sell it today you would earn a total of  8.00  from holding National CineMedia or generate 1.21% return on investment over 90 days.

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

51Talk Online Education  vs.  National CineMedia

51Talk Online Education

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in 51Talk Online Education are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of rather uncertain basic indicators, 51Talk Online exhibited solid returns over the last few months and may actually be approaching a breakup point.

National CineMedia

Risk-Adjusted Performance

Very Weak

Over the last 90 days National CineMedia has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest conflicting performance, the Stock's primary indicators remain strong and the recent confusion on Wall Street may also be a sign of long-lasting gains for the firm traders.

Pair Trading with 51Talk Online and National CineMedia

The main advantage of trading using opposite 51Talk Online and National CineMedia positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if 51Talk Online position performs unexpectedly, National CineMedia 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 National CineMedia will offset losses from the drop in National CineMedia's long position.

The idea behind 51Talk Online Education and National CineMedia 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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.