Correlation Between Insignia Financial and Skycity Entertainment

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

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

Diversification Opportunities for Insignia Financial and Skycity Entertainment

0.25

Correlation Coefficient

Insignia Financial  Skycity Entertainment

Modest diversification

The 3 months correlation between Insignia and Skycity is 0.25. Overlapping area represents the amount of risk that can be diversified away by holding Insignia Financial and Skycity Entertainment Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Skycity Entertainment and Insignia Financial 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 Insignia Financial 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 Insignia Financial i.e., Insignia Financial and Skycity Entertainment go up and down completely randomly.

Pair Corralation between Insignia Financial and Skycity Entertainment

Assuming the 90 days trading horizon Insignia Financial is expected to generate 1.21 times more return on investment than Skycity Entertainment. However, Insignia Financial is 1.21 times more volatile than Skycity Entertainment Group. It trades about 0.04 of its potential returns per unit of risk. Skycity Entertainment Group is currently generating about -0.04 per unit of risk. If you would invest  323.00  in Insignia Financial on October 22, 2024 and sell it today you would earn a total of  120.00  from holding Insignia Financial or generate 37.15% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

Insignia Financial  vs.  Skycity Entertainment Group

Insignia Financial

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Insignia Financial are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain essential indicators, Insignia Financial unveiled solid returns over the last few months and may actually be approaching a breakup point.

Skycity Entertainment

Risk-Adjusted Performance

5 of 100

Insignificant

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 Insignia Financial and Skycity Entertainment

The main advantage of trading using opposite Insignia Financial and Skycity Entertainment positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Insignia Financial 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 Insignia Financial 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.

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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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.