Correlation Between Netflix and Medincell

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

By analyzing existing cross correlation between Netflix and Medincell SA, you can compare the effects of market volatilities on Netflix and Medincell 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 Medincell. Check out your portfolio center. Please also check ongoing floating volatility patterns of Netflix and Medincell.

Diversification Opportunities for Netflix and Medincell

0.65

Correlation Coefficient

Netflix  Medincell

Poor diversification

The 3 months correlation between Netflix and Medincell is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding Netflix and Medincell SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Medincell SA 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 Medincell. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Medincell SA has no effect on the direction of Netflix i.e., Netflix and Medincell go up and down completely randomly.

Pair Corralation between Netflix and Medincell

Given the investment horizon of 90 days Netflix is expected to generate 0.75 times more return on investment than Medincell. However, Netflix is 1.34 times less risky than Medincell. It trades about 0.26 of its potential returns per unit of risk. Medincell SA is currently generating about -0.02 per unit of risk. If you would invest  68,680  in Netflix on September 12, 2024 and sell it today you would earn a total of  24,976  from holding Netflix or generate 36.37% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	98.46%
Values	Daily Returns

Netflix  vs.  Medincell SA

Netflix

Risk-Adjusted Performance

20 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Netflix are ranked lower than 20 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak essential indicators, Netflix showed solid returns over the last few months and may actually be approaching a breakup point.

Medincell SA

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Medincell SA has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable basic indicators, Medincell is not utilizing all of its potentials. The latest stock price agitation, may contribute to short-term losses for the retail investors.

Pair Trading with Netflix and Medincell

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

The idea behind Netflix and Medincell 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.

Check out your portfolio center.

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 Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.