Correlation Between Nine Entertainment and SES SA

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

Diversification Opportunities for Nine Entertainment and SES SA

0.67

Correlation Coefficient

Nine Entertainment  SES SA

Poor diversification

The 3 months correlation between Nine and SES is 0.67. Overlapping area represents the amount of risk that can be diversified away by holding Nine Entertainment Co and SES SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SES SA 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 SES SA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SES SA has no effect on the direction of Nine Entertainment i.e., Nine Entertainment and SES SA go up and down completely randomly.

Pair Corralation between Nine Entertainment and SES SA

Assuming the 90 days horizon Nine Entertainment is expected to generate 1.71 times less return on investment than SES SA. In addition to that, Nine Entertainment is 1.59 times more volatile than SES SA. It trades about 0.08 of its total potential returns per unit of risk. SES SA is currently generating about 0.22 per unit of volatility. If you would invest  316.00  in SES SA on December 27, 2024 and sell it today you would earn a total of  288.00  from holding SES SA or generate 91.14% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	96.67%
Values	Daily Returns

Nine Entertainment Co  vs.  SES SA

Nine Entertainment

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Nine Entertainment Co are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite nearly weak basic indicators, Nine Entertainment reported solid returns over the last few months and may actually be approaching a breakup point.

SES SA

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in SES SA are ranked lower than 17 (%) of all global equities and portfolios over the last 90 days. Despite nearly weak basic indicators, SES SA reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Nine Entertainment and SES SA

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

The idea behind Nine Entertainment Co and SES 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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.