Correlation Between Movie Games and Bank Millennium

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

Diversification Opportunities for Movie Games and Bank Millennium

0.31

Correlation Coefficient

Movie Games  Bank Millennium

Weak diversification

The 3 months correlation between Movie and Bank is 0.31. Overlapping area represents the amount of risk that can be diversified away by holding Movie Games SA and Bank Millennium SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bank Millennium 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 Bank Millennium. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bank Millennium SA has no effect on the direction of Movie Games i.e., Movie Games and Bank Millennium go up and down completely randomly.

Pair Corralation between Movie Games and Bank Millennium

Assuming the 90 days trading horizon Movie Games is expected to generate 8.82 times less return on investment than Bank Millennium. In addition to that, Movie Games is 1.17 times more volatile than Bank Millennium SA. It trades about 0.03 of its total potential returns per unit of risk. Bank Millennium SA is currently generating about 0.33 per unit of volatility. If you would invest  868.00  in Bank Millennium SA on December 21, 2024 and sell it today you would earn a total of  474.00  from holding Bank Millennium SA or generate 54.61% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	98.31%
Values	Daily Returns

Movie Games SA  vs.  Bank Millennium SA

Movie Games SA

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Movie Games SA are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. 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.

Bank Millennium SA

Risk-Adjusted Performance

Strong

Compared to the overall equity markets, risk-adjusted returns on investments in Bank Millennium SA are ranked lower than 26 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak basic indicators, Bank Millennium reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Movie Games and Bank Millennium

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

The idea behind Movie Games SA and Bank Millennium 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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.