Correlation Between Insyde Software and Softstar Entertainment

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

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

Diversification Opportunities for Insyde Software and Softstar Entertainment

0.01

Correlation Coefficient

Insyde Software  Softstar Entertainment

Significant diversification

The 3 months correlation between Insyde and Softstar is 0.01. Overlapping area represents the amount of risk that can be diversified away by holding Insyde Software and Softstar Entertainment in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Softstar Entertainment and Insyde Software 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 Insyde Software 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 Insyde Software i.e., Insyde Software and Softstar Entertainment go up and down completely randomly.

Pair Corralation between Insyde Software and Softstar Entertainment

Assuming the 90 days trading horizon Insyde Software is expected to under-perform the Softstar Entertainment. In addition to that, Insyde Software is 1.42 times more volatile than Softstar Entertainment. It trades about -0.12 of its total potential returns per unit of risk. Softstar Entertainment is currently generating about -0.01 per unit of volatility. If you would invest  5,700  in Softstar Entertainment on December 25, 2024 and sell it today you would lose (140.00) from holding Softstar Entertainment or give up 2.46% of portfolio value over 90 days.

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

Insyde Software  vs.  Softstar Entertainment

Insyde Software

Risk-Adjusted Performance

Very Weak

Over the last 90 days Insyde Software has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of abnormal performance in the last few months, the Stock's basic indicators remain fairly stable which may send shares a bit higher in April 2025. The latest fuss may also be a sign of long-term up-swing for the venture sophisticated investors.

Softstar Entertainment

Risk-Adjusted Performance

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 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 Insyde Software and Softstar Entertainment

The main advantage of trading using opposite Insyde Software and Softstar Entertainment positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Insyde Software 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 Insyde Software 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.

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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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.