Correlation Between Immersion and Bd Multimedia

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

By analyzing existing cross correlation between Immersion SA and Bd Multimedia, you can compare the effects of market volatilities on Immersion and Bd Multimedia 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 Immersion with a short position of Bd Multimedia. Check out your portfolio center. Please also check ongoing floating volatility patterns of Immersion and Bd Multimedia.

Diversification Opportunities for Immersion and Bd Multimedia

0.16

Correlation Coefficient

Immersion  Bd Multimedia

Average diversification

The 3 months correlation between Immersion and ALBDM is 0.16. Overlapping area represents the amount of risk that can be diversified away by holding Immersion SA and Bd Multimedia in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bd Multimedia and Immersion 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 Immersion SA are associated (or correlated) with Bd Multimedia. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bd Multimedia has no effect on the direction of Immersion i.e., Immersion and Bd Multimedia go up and down completely randomly.

Pair Corralation between Immersion and Bd Multimedia

Assuming the 90 days trading horizon Immersion SA is expected to generate 0.67 times more return on investment than Bd Multimedia. However, Immersion SA is 1.49 times less risky than Bd Multimedia. It trades about 0.02 of its potential returns per unit of risk. Bd Multimedia is currently generating about -0.1 per unit of risk. If you would invest  166.00  in Immersion SA on September 27, 2024 and sell it today you would earn a total of  2.00  from holding Immersion SA or generate 1.2% return on investment over 90 days.

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

Immersion SA  vs.  Bd Multimedia

Immersion SA

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Immersion SA are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak basic indicators, Immersion may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Bd Multimedia

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Bd Multimedia has generated negative risk-adjusted returns adding no value to investors with long positions. Even with weak performance in the last few months, the Stock's basic indicators remain relatively invariable which may send shares a bit higher in January 2025. The latest agitation may also be a sign of long-running up-swing for the enterprise retail investors.

Pair Trading with Immersion and Bd Multimedia

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

The idea behind Immersion SA and Bd Multimedia 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.

Check out your portfolio center.

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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.