Correlation Between House Of and Premiere Entertainment

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

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

Diversification Opportunities for House Of and Premiere Entertainment

0.12

Correlation Coefficient

House Of  Premiere Entertainment

Average diversification

The 3 months correlation between House and Premiere is 0.12. Overlapping area represents the amount of risk that can be diversified away by holding House of Investments and Premiere Entertainment in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Premiere Entertainment and House Of 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 House of Investments are associated (or correlated) with Premiere Entertainment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Premiere Entertainment has no effect on the direction of House Of i.e., House Of and Premiere Entertainment go up and down completely randomly.

Pair Corralation between House Of and Premiere Entertainment

Assuming the 90 days trading horizon House of Investments is expected to generate 0.36 times more return on investment than Premiere Entertainment. However, House of Investments is 2.76 times less risky than Premiere Entertainment. It trades about 0.09 of its potential returns per unit of risk. Premiere Entertainment is currently generating about 0.02 per unit of risk. If you would invest  346.00  in House of Investments on September 14, 2024 and sell it today you would earn a total of  11.00  from holding House of Investments or generate 3.18% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	42.86%
Values	Daily Returns

House of Investments  vs.  Premiere Entertainment

House of Investments

Risk-Adjusted Performance

7 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in House of Investments are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady basic indicators, House Of may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Premiere Entertainment

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Premiere Entertainment are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound technical and fundamental indicators, Premiere Entertainment is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with House Of and Premiere Entertainment

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

The idea behind House of Investments and Premiere Entertainment 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 Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.