Correlation Between SKONEC Entertainment and System

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

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

Diversification Opportunities for SKONEC Entertainment and System

0.68

Correlation Coefficient

SKONEC Entertainment  System

Poor diversification

The 3 months correlation between SKONEC and System is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding SKONEC Entertainment Co and System and Application in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on System and Application and SKONEC 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 SKONEC Entertainment Co are associated (or correlated) with System. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of System and Application has no effect on the direction of SKONEC Entertainment i.e., SKONEC Entertainment and System go up and down completely randomly.

Pair Corralation between SKONEC Entertainment and System

Assuming the 90 days trading horizon SKONEC Entertainment Co is expected to under-perform the System. But the stock apears to be less risky and, when comparing its historical volatility, SKONEC Entertainment Co is 1.01 times less risky than System. The stock trades about -0.01 of its potential returns per unit of risk. The System and Application is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest  156,400  in System and Application on September 24, 2024 and sell it today you would earn a total of  3,800  from holding System and Application or generate 2.43% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	98.41%
Values	Daily Returns

SKONEC Entertainment Co  vs.  System and Application

SKONEC Entertainment

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days SKONEC Entertainment Co has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, SKONEC Entertainment is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

System and Application

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in System and Application are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, System may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with SKONEC Entertainment and System

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

The idea behind SKONEC Entertainment Co and System and Application 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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.