Correlation Between Cardiff Lexington and SMC Entertainment

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

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

Diversification Opportunities for Cardiff Lexington and SMC Entertainment

0.43

Correlation Coefficient

Cardiff Lexington  SMC Entertainment

Very weak diversification

The 3 months correlation between Cardiff and SMC is 0.43. Overlapping area represents the amount of risk that can be diversified away by holding Cardiff Lexington Corp and SMC Entertainment in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SMC Entertainment and Cardiff Lexington 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 Cardiff Lexington Corp are associated (or correlated) with SMC Entertainment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SMC Entertainment has no effect on the direction of Cardiff Lexington i.e., Cardiff Lexington and SMC Entertainment go up and down completely randomly.

Pair Corralation between Cardiff Lexington and SMC Entertainment

Given the investment horizon of 90 days Cardiff Lexington Corp is expected to generate 4.74 times more return on investment than SMC Entertainment. However, Cardiff Lexington is 4.74 times more volatile than SMC Entertainment. It trades about 0.1 of its potential returns per unit of risk. SMC Entertainment is currently generating about 0.07 per unit of risk. If you would invest  0.01  in Cardiff Lexington Corp on September 12, 2024 and sell it today you would earn a total of  299.99  from holding Cardiff Lexington Corp or generate 2999900.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	93.66%
Values	Daily Returns

Cardiff Lexington Corp  vs.  SMC Entertainment

Cardiff Lexington Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Cardiff Lexington Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong forward indicators, Cardiff Lexington is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

SMC Entertainment

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days SMC Entertainment has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's fundamental indicators remain rather sound which may send shares a bit higher in January 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Pair Trading with Cardiff Lexington and SMC Entertainment

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

The idea behind Cardiff Lexington Corp and SMC 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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.