Correlation Between Seven Arts and JPX Global

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

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

Diversification Opportunities for Seven Arts and JPX Global

0.0

Correlation Coefficient

Seven Arts  JPX Global

Pay attention - limited upside

The 3 months correlation between Seven and JPX is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Seven Arts Entertainment and JPX Global in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on JPX Global and Seven Arts 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 Seven Arts Entertainment are associated (or correlated) with JPX Global. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of JPX Global has no effect on the direction of Seven Arts i.e., Seven Arts and JPX Global go up and down completely randomly.

Pair Corralation between Seven Arts and JPX Global

Given the investment horizon of 90 days Seven Arts is expected to generate 2.51 times less return on investment than JPX Global. But when comparing it to its historical volatility, Seven Arts Entertainment is 2.47 times less risky than JPX Global. It trades about 0.08 of its potential returns per unit of risk. JPX Global is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest  0.16  in JPX Global on December 4, 2024 and sell it today you would lose (0.15) from holding JPX Global or give up 93.75% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	97.97%
Values	Daily Returns

Seven Arts Entertainment  vs.  JPX Global

Seven Arts Entertainment

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Seven Arts Entertainment are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak basic indicators, Seven Arts showed solid returns over the last few months and may actually be approaching a breakup point.

JPX Global

Risk-Adjusted Performance

Very Weak

Over the last 90 days JPX Global has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong technical and fundamental indicators, JPX Global is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Seven Arts and JPX Global

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

The idea behind Seven Arts Entertainment and JPX Global 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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.