Correlation Between HP and SMC Entertainment
Can any of the company-specific risk be diversified away by investing in both HP and SMC 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 HP and SMC Entertainment into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between HP Inc and SMC Entertainment, you can compare the effects of market volatilities on HP and SMC 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 HP with a short position of SMC Entertainment. Check out your portfolio center. Please also check ongoing floating volatility patterns of HP and SMC Entertainment.
Diversification Opportunities for HP and SMC Entertainment
-0.53 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between HP and SMC is -0.53. Overlapping area represents the amount of risk that can be diversified away by holding HP Inc and SMC Entertainment in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SMC Entertainment and HP 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 HP Inc are associated (or correlated) with SMC Entertainment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SMC Entertainment has no effect on the direction of HP i.e., HP and SMC Entertainment go up and down completely randomly.
Pair Corralation between HP and SMC Entertainment
Considering the 90-day investment horizon HP Inc is expected to under-perform the SMC Entertainment. But the stock apears to be less risky and, when comparing its historical volatility, HP Inc is 6.72 times less risky than SMC Entertainment. The stock trades about -0.12 of its potential returns per unit of risk. The SMC Entertainment is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest 0.17 in SMC Entertainment on December 24, 2024 and sell it today you would earn a total of 0.11 from holding SMC Entertainment or generate 64.71% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Very Weak |
Accuracy | 100.0% |
Values | Daily Returns |
HP Inc vs. SMC Entertainment
Performance |
Timeline |
HP Inc |
SMC Entertainment |
HP and SMC Entertainment Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with HP and SMC Entertainment
The main advantage of trading using opposite HP and SMC Entertainment positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if HP position performs unexpectedly, SMC 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 SMC Entertainment will offset losses from the drop in SMC Entertainment's long position.The idea behind HP Inc and SMC Entertainment 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.SMC Entertainment vs. One Step Vending | SMC Entertainment vs. SNM Gobal Holdings | SMC Entertainment vs. Hiru Corporation | SMC Entertainment vs. Sack Lunch Productions |
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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.
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