Correlation Between Salesforce and Movie Games

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

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

Diversification Opportunities for Salesforce and Movie Games

0.86

Correlation Coefficient

Salesforce  Movie Games

Very poor diversification

The 3 months correlation between Salesforce and Movie is 0.86. Overlapping area represents the amount of risk that can be diversified away by holding PZ Cormay SA 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 Salesforce 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 PZ Cormay SA 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 Salesforce i.e., Salesforce and Movie Games go up and down completely randomly.

Pair Corralation between Salesforce and Movie Games

Assuming the 90 days trading horizon PZ Cormay SA is expected to under-perform the Movie Games. But the stock apears to be less risky and, when comparing its historical volatility, PZ Cormay SA is 1.8 times less risky than Movie Games. The stock trades about -0.07 of its potential returns per unit of risk. The Movie Games SA is currently generating about 0.0 of returns per unit of risk over similar time horizon. If you would invest  2,310  in Movie Games SA on September 29, 2024 and sell it today you would lose (756.00) from holding Movie Games SA or give up 32.73% of portfolio value over 90 days.

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

PZ Cormay SA  vs.  Movie Games SA

PZ Cormay SA

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days PZ Cormay 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.

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. 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 Salesforce and Movie Games

The main advantage of trading using opposite Salesforce and Movie Games positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Salesforce 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' long position.

The idea behind PZ Cormay SA 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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.