Correlation Between Softstar Entertainment and K Way

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

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

Diversification Opportunities for Softstar Entertainment and K Way

-0.35

Correlation Coefficient

Softstar Entertainment  K Way

Very good diversification

The 3 months correlation between Softstar and 5201 is -0.35. Overlapping area represents the amount of risk that can be diversified away by holding Softstar Entertainment and K Way Information in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on K Way Information and Softstar 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 Softstar Entertainment are associated (or correlated) with K Way. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of K Way Information has no effect on the direction of Softstar Entertainment i.e., Softstar Entertainment and K Way go up and down completely randomly.

Pair Corralation between Softstar Entertainment and K Way

Assuming the 90 days trading horizon Softstar Entertainment is expected to under-perform the K Way. But the stock apears to be less risky and, when comparing its historical volatility, Softstar Entertainment is 1.21 times less risky than K Way. The stock trades about -0.08 of its potential returns per unit of risk. The K Way Information is currently generating about 0.16 of returns per unit of risk over similar time horizon. If you would invest  2,705  in K Way Information on September 28, 2024 and sell it today you would earn a total of  170.00  from holding K Way Information or generate 6.28% return on investment over 90 days.

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

Softstar Entertainment  vs.  K Way Information

Softstar Entertainment

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Softstar Entertainment has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest abnormal performance, the Stock's basic indicators remain stable and the latest fuss on Wall Street may also be a sign of long-term gains for the venture sophisticated investors.

K Way Information

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in K Way Information are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of fairly stable basic indicators, K Way 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 Softstar Entertainment and K Way

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

The idea behind Softstar Entertainment and K Way Information 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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..