Correlation Between 04686JAD3 and National CineMedia

Can any of the company-specific risk be diversified away by investing in both 04686JAD3 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 04686JAD3 and National CineMedia into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between ATH 395 25 MAY 51 and National CineMedia, you can compare the effects of market volatilities on 04686JAD3 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 04686JAD3 with a short position of National CineMedia. Check out your portfolio center. Please also check ongoing floating volatility patterns of 04686JAD3 and National CineMedia.

Diversification Opportunities for 04686JAD3 and National CineMedia

0.62

Correlation Coefficient

04686JAD3  National CineMedia

Poor diversification

The 3 months correlation between 04686JAD3 and National is 0.62. Overlapping area represents the amount of risk that can be diversified away by holding ATH 395 25 MAY 51 and National CineMedia in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on National CineMedia and 04686JAD3 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 ATH 395 25 MAY 51 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 04686JAD3 i.e., 04686JAD3 and National CineMedia go up and down completely randomly.

Pair Corralation between 04686JAD3 and National CineMedia

Assuming the 90 days trading horizon ATH 395 25 MAY 51 is expected to generate 0.34 times more return on investment than National CineMedia. However, ATH 395 25 MAY 51 is 2.94 times less risky than National CineMedia. It trades about 0.0 of its potential returns per unit of risk. National CineMedia is currently generating about -0.02 per unit of risk. If you would invest  7,275  in ATH 395 25 MAY 51 on October 25, 2024 and sell it today you would lose (29.00) from holding ATH 395 25 MAY 51 or give up 0.4% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	90.0%
Values	Daily Returns

ATH 395 25 MAY 51  vs.  National CineMedia

04686JAD3

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days ATH 395 25 MAY 51 has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, 04686JAD3 is not utilizing all of its potentials. The newest stock price disturbance, may contribute to short-term losses for the investors.

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 04686JAD3 and National CineMedia

The main advantage of trading using opposite 04686JAD3 and National CineMedia positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if 04686JAD3 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 ATH 395 25 MAY 51 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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.