Correlation Between Com7 PCL and Sky ICT

Can any of the company-specific risk be diversified away by investing in both Com7 PCL and Sky ICT 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 Com7 PCL and Sky ICT into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Com7 PCL and Sky ICT Public, you can compare the effects of market volatilities on Com7 PCL and Sky ICT 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 Com7 PCL with a short position of Sky ICT. Check out your portfolio center. Please also check ongoing floating volatility patterns of Com7 PCL and Sky ICT.

Diversification Opportunities for Com7 PCL and Sky ICT

-0.14

Correlation Coefficient

Com7 PCL  Sky ICT

Good diversification

The 3 months correlation between Com7 and Sky is -0.14. Overlapping area represents the amount of risk that can be diversified away by holding Com7 PCL and Sky ICT Public in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sky ICT Public and Com7 PCL 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 Com7 PCL are associated (or correlated) with Sky ICT. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sky ICT Public has no effect on the direction of Com7 PCL i.e., Com7 PCL and Sky ICT go up and down completely randomly.

Pair Corralation between Com7 PCL and Sky ICT

Assuming the 90 days trading horizon Com7 PCL is expected to under-perform the Sky ICT. But the stock apears to be less risky and, when comparing its historical volatility, Com7 PCL is 1.25 times less risky than Sky ICT. The stock trades about -0.18 of its potential returns per unit of risk. The Sky ICT Public is currently generating about 0.23 of returns per unit of risk over similar time horizon. If you would invest  2,340  in Sky ICT Public on October 10, 2024 and sell it today you would earn a total of  235.00  from holding Sky ICT Public or generate 10.04% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	95.0%
Values	Daily Returns

Com7 PCL  vs.  Sky ICT Public

Com7 PCL

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Com7 PCL has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent forward-looking signals, Com7 PCL is not utilizing all of its potentials. The current stock price mess, may contribute to short-term losses for the institutional investors.

Sky ICT Public

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Sky ICT Public are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite quite weak basic indicators, Sky ICT disclosed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Com7 PCL and Sky ICT

The main advantage of trading using opposite Com7 PCL and Sky ICT positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Com7 PCL position performs unexpectedly, Sky ICT 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 Sky ICT will offset losses from the drop in Sky ICT's long position.

The idea behind Com7 PCL and Sky ICT Public 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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.