Correlation Between Nine Entertainment and Suncorp

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

Diversification Opportunities for Nine Entertainment and Suncorp

0.39

Correlation Coefficient

Nine Entertainment  Suncorp

Weak diversification

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

Pair Corralation between Nine Entertainment and Suncorp

Assuming the 90 days trading horizon Nine Entertainment Co is expected to under-perform the Suncorp. In addition to that, Nine Entertainment is 1.39 times more volatile than Suncorp Group. It trades about -0.05 of its total potential returns per unit of risk. Suncorp Group is currently generating about 0.1 per unit of volatility. If you would invest  1,253  in Suncorp Group on October 4, 2024 and sell it today you would earn a total of  648.00  from holding Suncorp Group or generate 51.72% return on investment over 90 days.

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

Nine Entertainment Co  vs.  Suncorp Group

Nine Entertainment

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Nine Entertainment Co has generated negative risk-adjusted returns adding no value to investors with long positions. 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.

Suncorp Group

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Suncorp Group are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Suncorp may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Nine Entertainment and Suncorp

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

The idea behind Nine Entertainment Co and Suncorp Group 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 Global Correlations module to find global opportunities by holding instruments from different markets.