Correlation Between Netflix and I Sheng

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

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

Diversification Opportunities for Netflix and I Sheng

0.61

Correlation Coefficient

Netflix  I Sheng

Poor diversification

The 3 months correlation between Netflix and 6115 is 0.61. Overlapping area represents the amount of risk that can be diversified away by holding Netflix and I Sheng Electric Wire in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on I Sheng Electric and Netflix 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 Netflix are associated (or correlated) with I Sheng. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of I Sheng Electric has no effect on the direction of Netflix i.e., Netflix and I Sheng go up and down completely randomly.

Pair Corralation between Netflix and I Sheng

Given the investment horizon of 90 days Netflix is expected to generate 3.87 times more return on investment than I Sheng. However, Netflix is 3.87 times more volatile than I Sheng Electric Wire. It trades about 0.23 of its potential returns per unit of risk. I Sheng Electric Wire is currently generating about 0.0 per unit of risk. If you would invest  67,532  in Netflix on September 3, 2024 and sell it today you would earn a total of  21,149  from holding Netflix or generate 31.32% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	98.44%
Values	Daily Returns

Netflix  vs.  I Sheng Electric Wire

Netflix

Risk-Adjusted Performance

18 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Netflix are ranked lower than 18 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak essential indicators, Netflix showed solid returns over the last few months and may actually be approaching a breakup point.

I Sheng Electric

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Netflix and I Sheng

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

The idea behind Netflix and I Sheng Electric Wire 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 Portfolio Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.