Correlation Between Da32 Life and SK Growth

Can any of the company-specific risk be diversified away by investing in both Da32 Life 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 Da32 Life and SK Growth into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Da32 Life Science and SK Growth Opportunities, you can compare the effects of market volatilities on Da32 Life 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 Da32 Life with a short position of SK Growth. Check out your portfolio center. Please also check ongoing floating volatility patterns of Da32 Life and SK Growth.

Diversification Opportunities for Da32 Life and SK Growth

0.0

Correlation Coefficient

Da32 Life  SK Growth

Pay attention - limited upside

The 3 months correlation between Da32 and SKGR is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Da32 Life Science 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 Da32 Life 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 Da32 Life Science 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 Da32 Life i.e., Da32 Life and SK Growth go up and down completely randomly.

Pair Corralation between Da32 Life and SK Growth

Given the investment horizon of 90 days Da32 Life is expected to generate 1.33 times less return on investment than SK Growth. But when comparing it to its historical volatility, Da32 Life Science is 2.28 times less risky than SK Growth. It trades about 0.12 of its potential returns per unit of risk. SK Growth Opportunities is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest  1,059  in SK Growth Opportunities on October 23, 2024 and sell it today you would earn a total of  103.00  from holding SK Growth Opportunities or generate 9.73% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	4.1%
Values	Daily Returns

Da32 Life Science  vs.  SK Growth Opportunities

Da32 Life Science

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Da32 Life Science has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable essential indicators, Da32 Life 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

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in SK Growth Opportunities are ranked lower than 10 (%) 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 Da32 Life and SK Growth

The main advantage of trading using opposite Da32 Life and SK Growth positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Da32 Life 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 Da32 Life Science 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.

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 Portfolio Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.