Correlation Between Sk Biopharmaceutica and RedcapTour

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

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

Diversification Opportunities for Sk Biopharmaceutica and RedcapTour

-0.83

Correlation Coefficient

Sk Biopharmaceutica  RedcapTour

Pay attention - limited upside

The 3 months correlation between 326030 and RedcapTour is -0.83. Overlapping area represents the amount of risk that can be diversified away by holding Sk Biopharmaceuticals Co and RedcapTour Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on RedcapTour and Sk Biopharmaceutica 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 Sk Biopharmaceuticals Co are associated (or correlated) with RedcapTour. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of RedcapTour has no effect on the direction of Sk Biopharmaceutica i.e., Sk Biopharmaceutica and RedcapTour go up and down completely randomly.

Pair Corralation between Sk Biopharmaceutica and RedcapTour

Assuming the 90 days trading horizon Sk Biopharmaceuticals Co is expected to generate 2.06 times more return on investment than RedcapTour. However, Sk Biopharmaceutica is 2.06 times more volatile than RedcapTour Co. It trades about 0.06 of its potential returns per unit of risk. RedcapTour Co is currently generating about 0.05 per unit of risk. If you would invest  8,860,000  in Sk Biopharmaceuticals Co on October 9, 2024 and sell it today you would earn a total of  2,180,000  from holding Sk Biopharmaceuticals Co or generate 24.6% return on investment over 90 days.

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

Sk Biopharmaceuticals Co  vs.  RedcapTour Co

Sk Biopharmaceuticals

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Sk Biopharmaceuticals Co are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, Sk Biopharmaceutica is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

RedcapTour

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in RedcapTour Co are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, RedcapTour may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Sk Biopharmaceutica and RedcapTour

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

The idea behind Sk Biopharmaceuticals Co and RedcapTour 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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.