Correlation Between Insignia Systems and Dolphin Entertainment

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

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

Diversification Opportunities for Insignia Systems and Dolphin Entertainment

0.65

Correlation Coefficient

Insignia Systems  Dolphin Entertainment

Poor diversification

The 3 months correlation between Insignia and Dolphin is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding Insignia Systems and Dolphin Entertainment in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dolphin Entertainment and Insignia Systems 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 Insignia Systems are associated (or correlated) with Dolphin Entertainment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dolphin Entertainment has no effect on the direction of Insignia Systems i.e., Insignia Systems and Dolphin Entertainment go up and down completely randomly.

Pair Corralation between Insignia Systems and Dolphin Entertainment

If you would invest  120.00  in Dolphin Entertainment on February 4, 2024 and sell it today you would earn a total of  2.00  from holding Dolphin Entertainment or generate 1.67% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	4.55%
Values	Daily Returns

Insignia Systems  vs.  Dolphin Entertainment

Insignia Systems

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Insignia Systems has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable forward indicators, Insignia Systems is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

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 latest abnormal performance, the Stock's basic indicators remain healthy and the recent disarray on Wall Street may also be a sign of long period gains for the firm investors.

Pair Trading with Insignia Systems and Dolphin Entertainment

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

The idea behind Insignia Systems and Dolphin Entertainment 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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.