Correlation Between ESE Entertainment and Real Luck

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

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

Diversification Opportunities for ESE Entertainment and Real Luck

0.4

Correlation Coefficient

ESE Entertainment  Real Luck

Very weak diversification

The 3 months correlation between ESE and Real is 0.4. Overlapping area represents the amount of risk that can be diversified away by holding ESE Entertainment and Real Luck Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Real Luck Group and ESE 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 ESE Entertainment are associated (or correlated) with Real Luck. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Real Luck Group has no effect on the direction of ESE Entertainment i.e., ESE Entertainment and Real Luck go up and down completely randomly.

Pair Corralation between ESE Entertainment and Real Luck

Assuming the 90 days horizon ESE Entertainment is expected to under-perform the Real Luck. In addition to that, ESE Entertainment is 1.42 times more volatile than Real Luck Group. It trades about -0.15 of its total potential returns per unit of risk. Real Luck Group is currently generating about -0.02 per unit of volatility. If you would invest  7,300  in Real Luck Group on September 13, 2024 and sell it today you would lose (700.00) from holding Real Luck Group or give up 9.59% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	98.41%
Values	Daily Returns

ESE Entertainment  vs.  Real Luck Group

ESE Entertainment

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days ESE Entertainment has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of abnormal performance in the last few months, the Stock's basic indicators remain fairly stable which may send shares a bit higher in January 2025. The latest fuss may also be a sign of long-term up-swing for the venture sophisticated investors.

Real Luck Group

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Real Luck Group has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable fundamental indicators, Real Luck is not utilizing all of its potentials. The recent stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Pair Trading with ESE Entertainment and Real Luck

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

The idea behind ESE Entertainment and Real Luck Group 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 Portfolio Anywhere module to track or share privately all of your investments from the convenience of any device.