Correlation Between SKONEC Entertainment and NOVATECH

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

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

Diversification Opportunities for SKONEC Entertainment and NOVATECH

0.83

Correlation Coefficient

SKONEC Entertainment  NOVATECH

Very poor diversification

The 3 months correlation between SKONEC and NOVATECH is 0.83. Overlapping area represents the amount of risk that can be diversified away by holding SKONEC Entertainment Co and NOVATECH Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NOVATECH and SKONEC Entertainment 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 SKONEC Entertainment Co are associated (or correlated) with NOVATECH. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NOVATECH has no effect on the direction of SKONEC Entertainment i.e., SKONEC Entertainment and NOVATECH go up and down completely randomly.

Pair Corralation between SKONEC Entertainment and NOVATECH

Assuming the 90 days trading horizon SKONEC Entertainment is expected to generate 1.11 times less return on investment than NOVATECH. But when comparing it to its historical volatility, SKONEC Entertainment Co is 1.33 times less risky than NOVATECH. It trades about 0.28 of its potential returns per unit of risk. NOVATECH Co is currently generating about 0.24 of returns per unit of risk over similar time horizon. If you would invest  1,162,000  in NOVATECH Co on October 26, 2024 and sell it today you would earn a total of  750,000  from holding NOVATECH Co or generate 64.54% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	97.62%
Values	Daily Returns

SKONEC Entertainment Co  vs.  NOVATECH Co

SKONEC Entertainment

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in SKONEC Entertainment Co are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, SKONEC Entertainment sustained solid returns over the last few months and may actually be approaching a breakup point.

NOVATECH

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in NOVATECH Co are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, NOVATECH sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with SKONEC Entertainment and NOVATECH

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

The idea behind SKONEC Entertainment Co and NOVATECH 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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.