Correlation Between Imagicaaworld Entertainment and Entertainment Network

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

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

Diversification Opportunities for Imagicaaworld Entertainment and Entertainment Network

0.6

Correlation Coefficient

Imagicaaworld Entertainment  Entertainment Network

Poor diversification

The 3 months correlation between Imagicaaworld and Entertainment is 0.6. Overlapping area represents the amount of risk that can be diversified away by holding Imagicaaworld Entertainment Li and Entertainment Network Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Entertainment Network and Imagicaaworld 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 Imagicaaworld Entertainment Limited are associated (or correlated) with Entertainment Network. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Entertainment Network has no effect on the direction of Imagicaaworld Entertainment i.e., Imagicaaworld Entertainment and Entertainment Network go up and down completely randomly.

Pair Corralation between Imagicaaworld Entertainment and Entertainment Network

Assuming the 90 days trading horizon Imagicaaworld Entertainment Limited is expected to generate 1.06 times more return on investment than Entertainment Network. However, Imagicaaworld Entertainment is 1.06 times more volatile than Entertainment Network Limited. It trades about -0.01 of its potential returns per unit of risk. Entertainment Network Limited is currently generating about -0.07 per unit of risk. If you would invest  8,195  in Imagicaaworld Entertainment Limited on March 25, 2025 and sell it today you would lose (1,503) from holding Imagicaaworld Entertainment Limited or give up 18.34% of portfolio value over 90 days.

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

Imagicaaworld Entertainment Li  vs.  Entertainment Network Limited

Imagicaaworld Entertainment

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Imagicaaworld Entertainment Limited are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong fundamental indicators, Imagicaaworld Entertainment is not utilizing all of its potentials. The newest stock price disturbance, may contribute to short-term losses for the investors.

Entertainment Network

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Entertainment Network Limited are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak basic indicators, Entertainment Network unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Imagicaaworld Entertainment and Entertainment Network

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

The idea behind Imagicaaworld Entertainment Limited and Entertainment Network Limited 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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.