Correlation Between Netflix and Genting Singapore

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

By analyzing existing cross correlation between Netflix and Genting Singapore PLC, you can compare the effects of market volatilities on Netflix and Genting Singapore 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 Netflix with a short position of Genting Singapore. Check out your portfolio center. Please also check ongoing floating volatility patterns of Netflix and Genting Singapore.

Diversification Opportunities for Netflix and Genting Singapore

-0.3

Correlation Coefficient

Netflix  Genting Singapore

Very good diversification

The 3 months correlation between Netflix and Genting is -0.3. Overlapping area represents the amount of risk that can be diversified away by holding Netflix and Genting Singapore PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Genting Singapore PLC and Netflix 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 Netflix are associated (or correlated) with Genting Singapore. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Genting Singapore PLC has no effect on the direction of Netflix i.e., Netflix and Genting Singapore go up and down completely randomly.

Pair Corralation between Netflix and Genting Singapore

Given the investment horizon of 90 days Netflix is expected to generate 0.45 times more return on investment than Genting Singapore. However, Netflix is 2.24 times less risky than Genting Singapore. It trades about 0.07 of its potential returns per unit of risk. Genting Singapore PLC is currently generating about -0.04 per unit of risk. If you would invest  91,106  in Netflix on December 4, 2024 and sell it today you would earn a total of  6,950  from holding Netflix or generate 7.63% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Netflix  vs.  Genting Singapore PLC

Netflix

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Netflix are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak essential indicators, Netflix may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Genting Singapore PLC

Risk-Adjusted Performance

Very Weak

Over the last 90 days Genting Singapore PLC has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest conflicting performance, the Stock's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Pair Trading with Netflix and Genting Singapore

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

The idea behind Netflix and Genting Singapore PLC 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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.