Correlation Between Galaxy Entertainment and SJM Holdings

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

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

Diversification Opportunities for Galaxy Entertainment and SJM Holdings

0.05

Correlation Coefficient

Galaxy Entertainment  SJM Holdings

Significant diversification

The 3 months correlation between Galaxy and SJM is 0.05. Overlapping area represents the amount of risk that can be diversified away by holding Galaxy Entertainment Group and SJM Holdings Ltd in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SJM Holdings and Galaxy 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 Galaxy Entertainment Group are associated (or correlated) with SJM Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SJM Holdings has no effect on the direction of Galaxy Entertainment i.e., Galaxy Entertainment and SJM Holdings go up and down completely randomly.

Pair Corralation between Galaxy Entertainment and SJM Holdings

Assuming the 90 days horizon Galaxy Entertainment Group is expected to under-perform the SJM Holdings. In addition to that, Galaxy Entertainment is 2.86 times more volatile than SJM Holdings Ltd. It trades about -0.01 of its total potential returns per unit of risk. SJM Holdings Ltd is currently generating about 0.02 per unit of volatility. If you would invest  110.00  in SJM Holdings Ltd on December 4, 2024 and sell it today you would earn a total of  1.00  from holding SJM Holdings Ltd or generate 0.91% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	68.33%
Values	Daily Returns

Galaxy Entertainment Group  vs.  SJM Holdings Ltd

Galaxy Entertainment

Risk-Adjusted Performance

Very Weak

Over the last 90 days Galaxy Entertainment Group has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable technical and fundamental indicators, Galaxy Entertainment is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

SJM Holdings

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in SJM Holdings Ltd are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of fairly strong technical indicators, SJM Holdings is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Galaxy Entertainment and SJM Holdings

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

The idea behind Galaxy Entertainment Group and SJM Holdings Ltd 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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..