Correlation Between Hastings Rare and Skycity Entertainment

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

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

Diversification Opportunities for Hastings Rare and Skycity Entertainment

0.43

Correlation Coefficient

Hastings Rare  Skycity Entertainment

Very weak diversification

The 3 months correlation between Hastings and Skycity is 0.43. Overlapping area represents the amount of risk that can be diversified away by holding Hastings Rare Metals and Skycity Entertainment Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Skycity Entertainment and Hastings Rare 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 Hastings Rare Metals are associated (or correlated) with Skycity Entertainment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Skycity Entertainment has no effect on the direction of Hastings Rare i.e., Hastings Rare and Skycity Entertainment go up and down completely randomly.

Pair Corralation between Hastings Rare and Skycity Entertainment

Assuming the 90 days trading horizon Hastings Rare Metals is expected to under-perform the Skycity Entertainment. In addition to that, Hastings Rare is 2.14 times more volatile than Skycity Entertainment Group. It trades about -0.08 of its total potential returns per unit of risk. Skycity Entertainment Group is currently generating about -0.04 per unit of volatility. If you would invest  215.00  in Skycity Entertainment Group on October 24, 2024 and sell it today you would lose (83.00) from holding Skycity Entertainment Group or give up 38.6% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	99.8%
Values	Daily Returns

Hastings Rare Metals  vs.  Skycity Entertainment Group

Hastings Rare Metals

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Hastings Rare Metals are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Hastings Rare unveiled solid returns over the last few months and may actually be approaching a breakup point.

Skycity Entertainment

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Skycity Entertainment Group are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain fundamental indicators, Skycity Entertainment may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Hastings Rare and Skycity Entertainment

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

The idea behind Hastings Rare Metals and Skycity Entertainment Group 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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.