Correlation Between SBC Medical and National CineMedia

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

By analyzing existing cross correlation between SBC Medical Group and National CineMedia, you can compare the effects of market volatilities on SBC Medical and National CineMedia 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 SBC Medical with a short position of National CineMedia. Check out your portfolio center. Please also check ongoing floating volatility patterns of SBC Medical and National CineMedia.

Diversification Opportunities for SBC Medical and National CineMedia

0.35

Correlation Coefficient

SBC Medical  National CineMedia

Weak diversification

The 3 months correlation between SBC and National is 0.35. Overlapping area represents the amount of risk that can be diversified away by holding SBC Medical Group and National CineMedia in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on National CineMedia and SBC Medical 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 SBC Medical Group are associated (or correlated) with National CineMedia. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of National CineMedia has no effect on the direction of SBC Medical i.e., SBC Medical and National CineMedia go up and down completely randomly.

Pair Corralation between SBC Medical and National CineMedia

Assuming the 90 days horizon SBC Medical Group is expected to generate 3.5 times more return on investment than National CineMedia. However, SBC Medical is 3.5 times more volatile than National CineMedia. It trades about 0.06 of its potential returns per unit of risk. National CineMedia is currently generating about -0.03 per unit of risk. If you would invest  26.00  in SBC Medical Group on September 22, 2024 and sell it today you would earn a total of  1.00  from holding SBC Medical Group or generate 3.85% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	95.24%
Values	Daily Returns

SBC Medical Group  vs.  National CineMedia

SBC Medical Group

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in SBC Medical Group are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of fairly unfluctuating basic indicators, SBC Medical showed solid returns over the last few months and may actually be approaching a breakup point.

National CineMedia

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days National CineMedia has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fairly strong primary indicators, National CineMedia is not utilizing all of its potentials. The latest stock price confusion, may contribute to short-horizon losses for the traders.

Pair Trading with SBC Medical and National CineMedia

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

The idea behind SBC Medical Group and National CineMedia 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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.