Correlation Between Dolphin Entertainment and National CineMedia

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

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

Diversification Opportunities for Dolphin Entertainment and National CineMedia

-0.22

Correlation Coefficient

Dolphin Entertainment  National CineMedia

Very good diversification

The 3 months correlation between Dolphin and National is -0.22. Overlapping area represents the amount of risk that can be diversified away by holding Dolphin Entertainment and National CineMedia in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on National CineMedia and Dolphin 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 Dolphin Entertainment are associated (or correlated) with National CineMedia. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of National CineMedia has no effect on the direction of Dolphin Entertainment i.e., Dolphin Entertainment and National CineMedia go up and down completely randomly.

Pair Corralation between Dolphin Entertainment and National CineMedia

Given the investment horizon of 90 days Dolphin Entertainment is expected to generate 1.28 times more return on investment than National CineMedia. However, Dolphin Entertainment is 1.28 times more volatile than National CineMedia. It trades about -0.09 of its potential returns per unit of risk. National CineMedia is currently generating about -0.18 per unit of risk. If you would invest  122.00  in Dolphin Entertainment on February 11, 2024 and sell it today you would lose (10.00) from holding Dolphin Entertainment or give up 8.2% of portfolio value over 90 days.

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

Dolphin Entertainment  vs.  National CineMedia

Dolphin Entertainment

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Dolphin Entertainment has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of abnormal performance in the last few months, the Stock's basic indicators remain very healthy which may send shares a bit higher in June 2024. The recent disarray may also be a sign of long period up-swing for the firm investors.

National CineMedia

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in National CineMedia are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite fairly weak primary indicators, National CineMedia demonstrated solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Dolphin Entertainment and National CineMedia

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

The idea behind Dolphin Entertainment and National CineMedia 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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.