Correlation Between 37 Interactive and Sportsoul

Can any of the company-specific risk be diversified away by investing in both 37 Interactive and Sportsoul 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 37 Interactive and Sportsoul into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between 37 Interactive Entertainment and Sportsoul Co Ltd, you can compare the effects of market volatilities on 37 Interactive and Sportsoul 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 37 Interactive with a short position of Sportsoul. Check out your portfolio center. Please also check ongoing floating volatility patterns of 37 Interactive and Sportsoul.

Diversification Opportunities for 37 Interactive and Sportsoul

0.72

Correlation Coefficient

37 Interactive  Sportsoul

Poor diversification

The 3 months correlation between 002555 and Sportsoul is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding 37 Interactive Entertainment and Sportsoul Co Ltd in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sportsoul and 37 Interactive 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 37 Interactive Entertainment are associated (or correlated) with Sportsoul. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sportsoul has no effect on the direction of 37 Interactive i.e., 37 Interactive and Sportsoul go up and down completely randomly.

Pair Corralation between 37 Interactive and Sportsoul

Assuming the 90 days trading horizon 37 Interactive Entertainment is expected to under-perform the Sportsoul. But the stock apears to be less risky and, when comparing its historical volatility, 37 Interactive Entertainment is 1.14 times less risky than Sportsoul. The stock trades about -0.01 of its potential returns per unit of risk. The Sportsoul Co Ltd is currently generating about 0.0 of returns per unit of risk over similar time horizon. If you would invest  1,522  in Sportsoul Co Ltd on October 26, 2024 and sell it today you would lose (383.00) from holding Sportsoul Co Ltd or give up 25.16% of portfolio value over 90 days.

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

37 Interactive Entertainment  vs.  Sportsoul Co Ltd

37 Interactive Enter

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days 37 Interactive Entertainment has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

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.

Pair Trading with 37 Interactive and Sportsoul

The main advantage of trading using opposite 37 Interactive and Sportsoul positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if 37 Interactive position performs unexpectedly, Sportsoul 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 Sportsoul will offset losses from the drop in Sportsoul's long position.

The idea behind 37 Interactive Entertainment and Sportsoul Co Ltd 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 Portfolio Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.