Correlation Between Seven Arts and American Picture

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

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

Diversification Opportunities for Seven Arts and American Picture

0.32

Correlation Coefficient

Seven Arts  American Picture

Weak diversification

The 3 months correlation between Seven and American is 0.32. Overlapping area represents the amount of risk that can be diversified away by holding Seven Arts Entertainment and American Picture House in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on American Picture House and Seven Arts 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 Seven Arts Entertainment are associated (or correlated) with American Picture. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of American Picture House has no effect on the direction of Seven Arts i.e., Seven Arts and American Picture go up and down completely randomly.

Pair Corralation between Seven Arts and American Picture

Given the investment horizon of 90 days Seven Arts Entertainment is expected to generate 4.58 times more return on investment than American Picture. However, Seven Arts is 4.58 times more volatile than American Picture House. It trades about 0.02 of its potential returns per unit of risk. American Picture House is currently generating about -0.09 per unit of risk. If you would invest  0.05  in Seven Arts Entertainment on October 1, 2024 and sell it today you would lose (0.03) from holding Seven Arts Entertainment or give up 60.0% of portfolio value over 90 days.

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

Seven Arts Entertainment  vs.  American Picture House

Seven Arts Entertainment

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Seven Arts Entertainment are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of fairly fragile basic indicators, Seven Arts showed solid returns over the last few months and may actually be approaching a breakup point.

American Picture House

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days American Picture House has generated negative risk-adjusted returns adding no value to investors with long positions. Even with uncertain performance in the last few months, the Stock's technical indicators remain relatively invariable which may send shares a bit higher in January 2025. The latest agitation may also be a sign of long-running up-swing for the enterprise retail investors.

Pair Trading with Seven Arts and American Picture

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

The idea behind Seven Arts Entertainment and American Picture House 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.