Correlation Between Noble Financials and Drago Entertainment

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

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

Diversification Opportunities for Noble Financials and Drago Entertainment

0.23

Correlation Coefficient

Noble Financials  Drago Entertainment

Modest diversification

The 3 months correlation between Noble and Drago is 0.23. Overlapping area represents the amount of risk that can be diversified away by holding Noble Financials SA and Drago entertainment SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Drago entertainment and Noble Financials 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 Noble Financials SA are associated (or correlated) with Drago Entertainment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Drago entertainment has no effect on the direction of Noble Financials i.e., Noble Financials and Drago Entertainment go up and down completely randomly.

Pair Corralation between Noble Financials and Drago Entertainment

Assuming the 90 days trading horizon Noble Financials SA is expected to under-perform the Drago Entertainment. In addition to that, Noble Financials is 1.02 times more volatile than Drago entertainment SA. It trades about -0.01 of its total potential returns per unit of risk. Drago entertainment SA is currently generating about 0.07 per unit of volatility. If you would invest  2,110  in Drago entertainment SA on December 5, 2024 and sell it today you would earn a total of  160.00  from holding Drago entertainment SA or generate 7.58% return on investment over 90 days.

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

Noble Financials SA  vs.  Drago entertainment SA

Noble Financials

Risk-Adjusted Performance

Very Weak

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

Drago entertainment

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Drago entertainment SA are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak basic indicators, Drago Entertainment may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Noble Financials and Drago Entertainment

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

The idea behind Noble Financials SA and Drago entertainment 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.

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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.