Correlation Between Mastercard and SK Growth

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

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

Diversification Opportunities for Mastercard and SK Growth

0.89

Correlation Coefficient

Mastercard  SK Growth

Very poor diversification

The 3 months correlation between Mastercard and SKGR is 0.89. Overlapping area represents the amount of risk that can be diversified away by holding Mastercard and SK Growth Opportunities in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SK Growth Opportunities and Mastercard 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 Mastercard are associated (or correlated) with SK Growth. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SK Growth Opportunities has no effect on the direction of Mastercard i.e., Mastercard and SK Growth go up and down completely randomly.

Pair Corralation between Mastercard and SK Growth

Allowing for the 90-day total investment horizon Mastercard is expected to generate 2.42 times more return on investment than SK Growth. However, Mastercard is 2.42 times more volatile than SK Growth Opportunities. It trades about 0.09 of its potential returns per unit of risk. SK Growth Opportunities is currently generating about 0.07 per unit of risk. If you would invest  34,208  in Mastercard on September 14, 2024 and sell it today you would earn a total of  18,999  from holding Mastercard or generate 55.54% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	99.8%
Values	Daily Returns

Mastercard  vs.  SK Growth Opportunities

Mastercard

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Mastercard are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite somewhat inconsistent basic indicators, Mastercard may actually be approaching a critical reversion point that can send shares even higher in January 2025.

SK Growth Opportunities

Risk-Adjusted Performance

20 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in SK Growth Opportunities are ranked lower than 20 (%) of all global equities and portfolios over the last 90 days. Even with relatively invariable technical and fundamental indicators, SK Growth is not utilizing all of its potentials. The newest stock price agitation, may contribute to short-term losses for the retail investors.

Pair Trading with Mastercard and SK Growth

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

The idea behind Mastercard and SK Growth Opportunities 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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.