Correlation Between Movie Games and HM Inwest

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

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

Diversification Opportunities for Movie Games and HM Inwest

-0.56

Correlation Coefficient

Movie Games  HM Inwest

Excellent diversification

The 3 months correlation between Movie and HMI is -0.56. Overlapping area represents the amount of risk that can be diversified away by holding Movie Games SA and HM Inwest SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on HM Inwest SA and Movie Games 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 Movie Games SA are associated (or correlated) with HM Inwest. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of HM Inwest SA has no effect on the direction of Movie Games i.e., Movie Games and HM Inwest go up and down completely randomly.

Pair Corralation between Movie Games and HM Inwest

Assuming the 90 days trading horizon Movie Games is expected to generate 21.42 times less return on investment than HM Inwest. But when comparing it to its historical volatility, Movie Games SA is 1.82 times less risky than HM Inwest. It trades about 0.0 of its potential returns per unit of risk. HM Inwest SA is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest  4,620  in HM Inwest SA on December 29, 2024 and sell it today you would earn a total of  230.00  from holding HM Inwest SA or generate 4.98% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	98.41%
Values	Daily Returns

Movie Games SA  vs.  HM Inwest SA

Movie Games SA

Risk-Adjusted Performance

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 relatively invariable basic indicators, Movie Games is not utilizing all of its potentials. The latest stock price agitation, may contribute to short-term losses for the retail investors.

HM Inwest SA

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in HM Inwest SA are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak basic indicators, HM Inwest may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Movie Games and HM Inwest

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

The idea behind Movie Games SA and HM Inwest 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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.