Correlation Between Nine Entertainment and Carlton Investments

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

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

Diversification Opportunities for Nine Entertainment and Carlton Investments

0.39

Correlation Coefficient

Nine Entertainment  Carlton Investments

Weak diversification

The 3 months correlation between Nine and Carlton is 0.39. Overlapping area represents the amount of risk that can be diversified away by holding Nine Entertainment Co and Carlton Investments in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Carlton Investments and Nine 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 Nine Entertainment Co are associated (or correlated) with Carlton Investments. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Carlton Investments has no effect on the direction of Nine Entertainment i.e., Nine Entertainment and Carlton Investments go up and down completely randomly.

Pair Corralation between Nine Entertainment and Carlton Investments

Assuming the 90 days trading horizon Nine Entertainment Co is expected to under-perform the Carlton Investments. But the stock apears to be less risky and, when comparing its historical volatility, Nine Entertainment Co is 1.3 times less risky than Carlton Investments. The stock trades about -0.2 of its potential returns per unit of risk. The Carlton Investments is currently generating about -0.02 of returns per unit of risk over similar time horizon. If you would invest  3,075  in Carlton Investments on October 9, 2024 and sell it today you would lose (15.00) from holding Carlton Investments or give up 0.49% of portfolio value over 90 days.

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

Nine Entertainment Co  vs.  Carlton Investments

Nine Entertainment

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Nine Entertainment Co are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable fundamental indicators, Nine Entertainment is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Carlton Investments

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Carlton Investments are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, Carlton Investments is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Nine Entertainment and Carlton Investments

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

The idea behind Nine Entertainment Co and Carlton Investments 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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.