Correlation Between Min Aik and Softstar Entertainment

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

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

Diversification Opportunities for Min Aik and Softstar Entertainment

0.25

Correlation Coefficient

Min Aik  Softstar Entertainment

Modest diversification

The 3 months correlation between Min and Softstar is 0.25. Overlapping area represents the amount of risk that can be diversified away by holding Min Aik Technology and Softstar Entertainment in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Softstar Entertainment and Min Aik 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 Min Aik Technology are associated (or correlated) with Softstar Entertainment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Softstar Entertainment has no effect on the direction of Min Aik i.e., Min Aik and Softstar Entertainment go up and down completely randomly.

Pair Corralation between Min Aik and Softstar Entertainment

Assuming the 90 days trading horizon Min Aik is expected to generate 1.54 times less return on investment than Softstar Entertainment. But when comparing it to its historical volatility, Min Aik Technology is 1.05 times less risky than Softstar Entertainment. It trades about 0.01 of its potential returns per unit of risk. Softstar Entertainment is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest  6,140  in Softstar Entertainment on December 4, 2024 and sell it today you would earn a total of  30.00  from holding Softstar Entertainment or generate 0.49% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	98.21%
Values	Daily Returns

Min Aik Technology  vs.  Softstar Entertainment

Min Aik Technology

Risk-Adjusted Performance

Weak

Over the last 90 days Min Aik Technology has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable basic indicators, Min Aik is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Softstar Entertainment

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Softstar Entertainment are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of fairly stable basic indicators, Softstar Entertainment is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Pair Trading with Min Aik and Softstar Entertainment

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

The idea behind Min Aik Technology and Softstar Entertainment 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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.