Correlation Between Fearless Films and Sanwire

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

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

Diversification Opportunities for Fearless Films and Sanwire

0.55

Correlation Coefficient

Fearless Films  Sanwire

Very weak diversification

The 3 months correlation between Fearless and Sanwire is 0.55. Overlapping area represents the amount of risk that can be diversified away by holding Fearless Films and Sanwire in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sanwire and Fearless Films 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 Fearless Films are associated (or correlated) with Sanwire. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sanwire has no effect on the direction of Fearless Films i.e., Fearless Films and Sanwire go up and down completely randomly.

Pair Corralation between Fearless Films and Sanwire

Given the investment horizon of 90 days Fearless Films is expected to under-perform the Sanwire. But the pink sheet apears to be less risky and, when comparing its historical volatility, Fearless Films is 3.39 times less risky than Sanwire. The pink sheet trades about -0.09 of its potential returns per unit of risk. The Sanwire is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest  0.05  in Sanwire on October 1, 2024 and sell it today you would lose (0.01) from holding Sanwire or give up 20.0% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	86.57%
Values	Daily Returns

Fearless Films  vs.  Sanwire

Fearless Films

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Fearless Films has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent basic indicators, Fearless Films is not utilizing all of its potentials. The latest stock price mess, may contribute to short-term losses for the institutional investors.

Sanwire

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Sanwire are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Even with relatively abnormal basic indicators, Sanwire reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Fearless Films and Sanwire

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

The idea behind Fearless Films and Sanwire 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.