Correlation Between Cube Entertainment and DAEA TI

Can any of the company-specific risk be diversified away by investing in both Cube Entertainment and DAEA TI 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 Cube Entertainment and DAEA TI into the same portfolio, which is an essential part of the fundamental portfolio management process.

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

Diversification Opportunities for Cube Entertainment and DAEA TI

0.64

Correlation Coefficient

Cube Entertainment  DAEA TI

Poor diversification

The 3 months correlation between Cube and DAEA is 0.64. Overlapping area represents the amount of risk that can be diversified away by holding Cube Entertainment and DAEA TI Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on DAEA TI and Cube 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 Cube Entertainment are associated (or correlated) with DAEA TI. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of DAEA TI has no effect on the direction of Cube Entertainment i.e., Cube Entertainment and DAEA TI go up and down completely randomly.

Pair Corralation between Cube Entertainment and DAEA TI

Assuming the 90 days trading horizon Cube Entertainment is expected to generate 11.29 times less return on investment than DAEA TI. In addition to that, Cube Entertainment is 1.23 times more volatile than DAEA TI Co. It trades about 0.01 of its total potential returns per unit of risk. DAEA TI Co is currently generating about 0.09 per unit of volatility. If you would invest  256,500  in DAEA TI Co on September 12, 2024 and sell it today you would earn a total of  33,500  from holding DAEA TI Co or generate 13.06% return on investment over 90 days.

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

Cube Entertainment  vs.  DAEA TI Co

Cube Entertainment

Risk-Adjusted Performance

0 of 100

Weak

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

DAEA TI

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in DAEA TI Co are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, DAEA TI sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Cube Entertainment and DAEA TI

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

The idea behind Cube Entertainment and DAEA TI Co 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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.