Correlation Between Nine Entertainment and Midway

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

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

Diversification Opportunities for Nine Entertainment and Midway

0.31

Correlation Coefficient

Nine Entertainment  Midway

Weak diversification

The 3 months correlation between Nine and Midway is 0.31. Overlapping area represents the amount of risk that can be diversified away by holding Nine Entertainment Co and Midway in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Midway and Nine 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 Nine Entertainment Co are associated (or correlated) with Midway. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Midway has no effect on the direction of Nine Entertainment i.e., Nine Entertainment and Midway go up and down completely randomly.

Pair Corralation between Nine Entertainment and Midway

Assuming the 90 days trading horizon Nine Entertainment Co is expected to under-perform the Midway. But the stock apears to be less risky and, when comparing its historical volatility, Nine Entertainment Co is 4.56 times less risky than Midway. The stock trades about -0.03 of its potential returns per unit of risk. The Midway is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest  96.00  in Midway on September 3, 2024 and sell it today you would earn a total of  29.00  from holding Midway or generate 30.21% return on investment over 90 days.

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

Nine Entertainment Co  vs.  Midway

Nine Entertainment

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Nine Entertainment Co has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable fundamental indicators, Nine Entertainment is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Midway

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Midway are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Midway unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Nine Entertainment and Midway

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

The idea behind Nine Entertainment Co and Midway 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 Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.