Correlation Between Drago Entertainment and Astarta Holding

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

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

Diversification Opportunities for Drago Entertainment and Astarta Holding

-0.5

Correlation Coefficient

Drago Entertainment  Astarta Holding

Very good diversification

The 3 months correlation between Drago and Astarta is -0.5. Overlapping area represents the amount of risk that can be diversified away by holding Drago entertainment SA and Astarta Holding NV in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Astarta Holding NV and Drago 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 Drago entertainment SA are associated (or correlated) with Astarta Holding. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Astarta Holding NV has no effect on the direction of Drago Entertainment i.e., Drago Entertainment and Astarta Holding go up and down completely randomly.

Pair Corralation between Drago Entertainment and Astarta Holding

Assuming the 90 days trading horizon Drago entertainment SA is expected to under-perform the Astarta Holding. In addition to that, Drago Entertainment is 1.02 times more volatile than Astarta Holding NV. It trades about -0.03 of its total potential returns per unit of risk. Astarta Holding NV is currently generating about 0.26 per unit of volatility. If you would invest  3,085  in Astarta Holding NV on October 11, 2024 and sell it today you would earn a total of  1,225  from holding Astarta Holding NV or generate 39.71% return on investment over 90 days.

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

Drago entertainment SA  vs.  Astarta Holding NV

Drago entertainment

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Drago entertainment SA has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable basic indicators, Drago Entertainment is not utilizing all of its potentials. The latest stock price agitation, may contribute to short-term losses for the retail investors.

Astarta Holding NV

Risk-Adjusted Performance

20 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Astarta Holding NV are ranked lower than 20 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak basic indicators, Astarta Holding reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Drago Entertainment and Astarta Holding

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

The idea behind Drago entertainment SA and Astarta Holding NV 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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.