Correlation Between Drago Entertainment and M Food

Can any of the company-specific risk be diversified away by investing in both Drago Entertainment and M Food 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 M Food 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 M Food SA, you can compare the effects of market volatilities on Drago Entertainment and M Food 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 M Food. Check out your portfolio center. Please also check ongoing floating volatility patterns of Drago Entertainment and M Food.

Diversification Opportunities for Drago Entertainment and M Food

0.61

Correlation Coefficient

Drago Entertainment  M Food

Poor diversification

The 3 months correlation between Drago and MFD is 0.61. Overlapping area represents the amount of risk that can be diversified away by holding Drago entertainment SA and M Food SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on M Food SA 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 M Food. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of M Food SA has no effect on the direction of Drago Entertainment i.e., Drago Entertainment and M Food go up and down completely randomly.

Pair Corralation between Drago Entertainment and M Food

Assuming the 90 days trading horizon Drago entertainment SA is expected to generate 0.85 times more return on investment than M Food. However, Drago entertainment SA is 1.17 times less risky than M Food. It trades about 0.29 of its potential returns per unit of risk. M Food SA is currently generating about -0.07 per unit of risk. If you would invest  1,880  in Drago entertainment SA on October 22, 2024 and sell it today you would earn a total of  220.00  from holding Drago entertainment SA or generate 11.7% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	93.33%
Values	Daily Returns

Drago entertainment SA  vs.  M Food SA

Drago entertainment

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Drago entertainment SA are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. 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.

M Food SA

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days M Food 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 February 2025. The latest agitation may also be a sign of long-running up-swing for the enterprise retail investors.

Pair Trading with Drago Entertainment and M Food

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

The idea behind Drago entertainment SA and M Food 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 Stocks Directory module to find actively traded stocks across global markets.