Correlation Between Dolphin Entertainment and Oriental Culture

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

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

Diversification Opportunities for Dolphin Entertainment and Oriental Culture

0.29

Correlation Coefficient

Dolphin Entertainment  Oriental Culture

Modest diversification

The 3 months correlation between Dolphin and Oriental is 0.29. Overlapping area represents the amount of risk that can be diversified away by holding Dolphin Entertainment and Oriental Culture Holding in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Oriental Culture Holding and Dolphin 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 Dolphin Entertainment are associated (or correlated) with Oriental Culture. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Oriental Culture Holding has no effect on the direction of Dolphin Entertainment i.e., Dolphin Entertainment and Oriental Culture go up and down completely randomly.

Pair Corralation between Dolphin Entertainment and Oriental Culture

Given the investment horizon of 90 days Dolphin Entertainment is expected to generate 1.33 times more return on investment than Oriental Culture. However, Dolphin Entertainment is 1.33 times more volatile than Oriental Culture Holding. It trades about 0.08 of its potential returns per unit of risk. Oriental Culture Holding is currently generating about 0.02 per unit of risk. If you would invest  95.00  in Dolphin Entertainment on December 22, 2024 and sell it today you would earn a total of  16.00  from holding Dolphin Entertainment or generate 16.84% return on investment over 90 days.

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

Dolphin Entertainment  vs.  Oriental Culture Holding

Dolphin Entertainment

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Dolphin Entertainment are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of very abnormal basic indicators, Dolphin Entertainment displayed solid returns over the last few months and may actually be approaching a breakup point.

Oriental Culture Holding

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Oriental Culture Holding are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable fundamental indicators, Oriental Culture is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Dolphin Entertainment and Oriental Culture

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

The idea behind Dolphin Entertainment and Oriental Culture Holding 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.

Check out your portfolio center.

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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.