Correlation Between Warner Bros and Scienjoy Holding

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

By analyzing existing cross correlation between Warner Bros Discovery and Scienjoy Holding Corp, you can compare the effects of market volatilities on Warner Bros and Scienjoy Holding 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 Warner Bros with a short position of Scienjoy Holding. Check out your portfolio center. Please also check ongoing floating volatility patterns of Warner Bros and Scienjoy Holding.

Diversification Opportunities for Warner Bros and Scienjoy Holding

0.39

Correlation Coefficient

Warner Bros  Scienjoy Holding

Weak diversification

The 3 months correlation between Warner and Scienjoy is 0.39. Overlapping area represents the amount of risk that can be diversified away by holding Warner Bros Discovery and Scienjoy Holding Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Scienjoy Holding Corp and Warner Bros 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 Warner Bros Discovery are associated (or correlated) with Scienjoy Holding. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Scienjoy Holding Corp has no effect on the direction of Warner Bros i.e., Warner Bros and Scienjoy Holding go up and down completely randomly.

Pair Corralation between Warner Bros and Scienjoy Holding

Considering the 90-day investment horizon Warner Bros Discovery is expected to under-perform the Scienjoy Holding. But the stock apears to be less risky and, when comparing its historical volatility, Warner Bros Discovery is 4.25 times less risky than Scienjoy Holding. The stock trades about -0.36 of its potential returns per unit of risk. The Scienjoy Holding Corp is currently generating about -0.05 of returns per unit of risk over similar time horizon. If you would invest  98.00  in Scienjoy Holding Corp on October 17, 2024 and sell it today you would lose (16.00) from holding Scienjoy Holding Corp or give up 16.33% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

Warner Bros Discovery  vs.  Scienjoy Holding Corp

Warner Bros Discovery

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Warner Bros Discovery are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of rather uncertain fundamental drivers, Warner Bros exhibited solid returns over the last few months and may actually be approaching a breakup point.

Scienjoy Holding Corp

Risk-Adjusted Performance

0 of 100

Weak

Over the last 90 days Scienjoy Holding Corp has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively steady forward-looking indicators, Scienjoy Holding is not utilizing all of its potentials. The current stock price chaos, may contribute to medium-term losses for the stakeholders.

Pair Trading with Warner Bros and Scienjoy Holding

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

The idea behind Warner Bros Discovery and Scienjoy Holding Corp 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 Transaction History module to view history of all your transactions and understand their impact on performance.