Correlation Between Broad Capital and SK Growth

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

By analyzing existing cross correlation between Broad Capital Acquisition and SK Growth Opportunities, you can compare the effects of market volatilities on Broad Capital and SK Growth 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 Broad Capital with a short position of SK Growth. Check out your portfolio center. Please also check ongoing floating volatility patterns of Broad Capital and SK Growth.

Diversification Opportunities for Broad Capital and SK Growth

-0.55

Correlation Coefficient

Broad Capital  SK Growth

Excellent diversification

The 3 months correlation between Broad and SKGR is -0.55. Overlapping area represents the amount of risk that can be diversified away by holding Broad Capital Acquisition and SK Growth Opportunities in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SK Growth Opportunities and Broad Capital 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 Broad Capital Acquisition are associated (or correlated) with SK Growth. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SK Growth Opportunities has no effect on the direction of Broad Capital i.e., Broad Capital and SK Growth go up and down completely randomly.

Pair Corralation between Broad Capital and SK Growth

Assuming the 90 days horizon Broad Capital is expected to generate 1.39 times less return on investment than SK Growth. In addition to that, Broad Capital is 1.47 times more volatile than SK Growth Opportunities. It trades about 0.03 of its total potential returns per unit of risk. SK Growth Opportunities is currently generating about 0.06 per unit of volatility. If you would invest  1,025  in SK Growth Opportunities on October 4, 2024 and sell it today you would earn a total of  137.50  from holding SK Growth Opportunities or generate 13.41% return on investment over 90 days.

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

Broad Capital Acquisition  vs.  SK Growth Opportunities

Broad Capital Acquisition

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Broad Capital Acquisition has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable fundamental indicators, Broad Capital is not utilizing all of its potentials. The latest stock price uproar, may contribute to short-horizon losses for the private investors.

SK Growth Opportunities

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in SK Growth Opportunities are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. Even with relatively invariable technical and fundamental indicators, SK Growth is not utilizing all of its potentials. The newest stock price agitation, may contribute to short-term losses for the retail investors.

Pair Trading with Broad Capital and SK Growth

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

The idea behind Broad Capital Acquisition and SK Growth Opportunities 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 Portfolio Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.