Correlation Between MetaLabs and SK Holdings

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

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

Diversification Opportunities for MetaLabs and SK Holdings

0.89

Correlation Coefficient

MetaLabs  SK Holdings

Very poor diversification

The 3 months correlation between MetaLabs and 034730 is 0.89. Overlapping area represents the amount of risk that can be diversified away by holding MetaLabs Co and SK Holdings Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SK Holdings and MetaLabs 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 MetaLabs Co are associated (or correlated) with SK Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SK Holdings has no effect on the direction of MetaLabs i.e., MetaLabs and SK Holdings go up and down completely randomly.

Pair Corralation between MetaLabs and SK Holdings

Assuming the 90 days trading horizon MetaLabs Co is expected to under-perform the SK Holdings. In addition to that, MetaLabs is 1.34 times more volatile than SK Holdings Co. It trades about -0.12 of its total potential returns per unit of risk. SK Holdings Co is currently generating about -0.07 per unit of volatility. If you would invest  15,400,000  in SK Holdings Co on September 20, 2024 and sell it today you would lose (1,340,000) from holding SK Holdings Co or give up 8.7% of portfolio value over 90 days.

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

MetaLabs Co  vs.  SK Holdings Co

MetaLabs

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days MetaLabs Co has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain somewhat strong which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

SK Holdings

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days SK Holdings Co 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.

Pair Trading with MetaLabs and SK Holdings

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

The idea behind MetaLabs Co and SK Holdings Co 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.