Correlation Between Sportsoul and Markor International

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

By analyzing existing cross correlation between Sportsoul Co Ltd and Markor International Home, you can compare the effects of market volatilities on Sportsoul and Markor International 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 Sportsoul with a short position of Markor International. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sportsoul and Markor International.

Diversification Opportunities for Sportsoul and Markor International

0.75

Correlation Coefficient

Sportsoul  Markor International

Poor diversification

The 3 months correlation between Sportsoul and Markor is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding Sportsoul Co Ltd and Markor International Home in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Markor International Home and Sportsoul 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 Sportsoul Co Ltd are associated (or correlated) with Markor International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Markor International Home has no effect on the direction of Sportsoul i.e., Sportsoul and Markor International go up and down completely randomly.

Pair Corralation between Sportsoul and Markor International

Assuming the 90 days trading horizon Sportsoul Co Ltd is expected to generate 1.02 times more return on investment than Markor International. However, Sportsoul is 1.02 times more volatile than Markor International Home. It trades about -0.03 of its potential returns per unit of risk. Markor International Home is currently generating about -0.03 per unit of risk. If you would invest  1,686  in Sportsoul Co Ltd on October 9, 2024 and sell it today you would lose (575.00) from holding Sportsoul Co Ltd or give up 34.1% of portfolio value over 90 days.

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

Sportsoul Co Ltd  vs.  Markor International Home

Sportsoul

Risk-Adjusted Performance

0 of 100

Very Weak

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

Markor International Home

Risk-Adjusted Performance

2 of 100

Weak

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

Pair Trading with Sportsoul and Markor International

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

The idea behind Sportsoul Co Ltd and Markor International Home 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.

Check out your portfolio center.

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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.