Correlation Between Mills Music and SkyCity Entertainment

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

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

Diversification Opportunities for Mills Music and SkyCity Entertainment

0.59

Correlation Coefficient

Mills Music  SkyCity Entertainment

Very weak diversification

The 3 months correlation between Mills and SkyCity is 0.59. Overlapping area represents the amount of risk that can be diversified away by holding Mills Music Trust and SkyCity Entertainment Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SkyCity Entertainment and Mills Music 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 Mills Music Trust 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 Mills Music i.e., Mills Music and SkyCity Entertainment go up and down completely randomly.

Pair Corralation between Mills Music and SkyCity Entertainment

Assuming the 90 days horizon Mills Music Trust is expected to generate 1.28 times more return on investment than SkyCity Entertainment. However, Mills Music is 1.28 times more volatile than SkyCity Entertainment Group. It trades about 0.02 of its potential returns per unit of risk. SkyCity Entertainment Group is currently generating about -0.03 per unit of risk. If you would invest  3,414  in Mills Music Trust on October 24, 2024 and sell it today you would earn a total of  136.00  from holding Mills Music Trust or generate 3.98% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	73.99%
Values	Daily Returns

Mills Music Trust  vs.  SkyCity Entertainment Group

Mills Music Trust

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Mills Music Trust has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Mills Music is not utilizing all of its potentials. The latest stock price uproar, may contribute to short-horizon losses for the private investors.

SkyCity Entertainment

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days SkyCity Entertainment Group has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fragile performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Pair Trading with Mills Music and SkyCity Entertainment

The main advantage of trading using opposite Mills Music and SkyCity Entertainment positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Mills Music 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 Mills Music Trust 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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.