Correlation Between Manitou BF and DONTNOD Entertainment

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

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

Diversification Opportunities for Manitou BF and DONTNOD Entertainment

-0.36

Correlation Coefficient

Manitou BF  DONTNOD Entertainment

Very good diversification

The 3 months correlation between Manitou and DONTNOD is -0.36. Overlapping area represents the amount of risk that can be diversified away by holding Manitou BF SA and DONTNOD Entertainment SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on DONTNOD Entertainment and Manitou BF 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 Manitou BF SA are associated (or correlated) with DONTNOD Entertainment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of DONTNOD Entertainment has no effect on the direction of Manitou BF i.e., Manitou BF and DONTNOD Entertainment go up and down completely randomly.

Pair Corralation between Manitou BF and DONTNOD Entertainment

Assuming the 90 days trading horizon Manitou BF SA is expected to generate 0.38 times more return on investment than DONTNOD Entertainment. However, Manitou BF SA is 2.62 times less risky than DONTNOD Entertainment. It trades about 0.29 of its potential returns per unit of risk. DONTNOD Entertainment SA is currently generating about -0.03 per unit of risk. If you would invest  1,550  in Manitou BF SA on December 3, 2024 and sell it today you would earn a total of  720.00  from holding Manitou BF SA or generate 46.45% return on investment over 90 days.

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

Manitou BF SA  vs.  DONTNOD Entertainment SA

Manitou BF SA

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Manitou BF SA are ranked lower than 22 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Manitou BF sustained solid returns over the last few months and may actually be approaching a breakup point.

DONTNOD Entertainment

Risk-Adjusted Performance

Very Weak

Over the last 90 days DONTNOD Entertainment SA has generated negative risk-adjusted returns adding no value to investors with long positions. Even with latest weak performance, the Stock's basic indicators remain invariable and the latest agitation on Wall Street may also be a sign of long-running gains for the enterprise retail investors.

Pair Trading with Manitou BF and DONTNOD Entertainment

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

The idea behind Manitou BF SA and DONTNOD 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.

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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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.