Correlation Between Sakar Healthcare and Silly Monks

Can any of the company-specific risk be diversified away by investing in both Sakar Healthcare and Silly Monks 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 Sakar Healthcare and Silly Monks into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Sakar Healthcare Limited and Silly Monks Entertainment, you can compare the effects of market volatilities on Sakar Healthcare and Silly Monks 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 Sakar Healthcare with a short position of Silly Monks. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sakar Healthcare and Silly Monks.

Diversification Opportunities for Sakar Healthcare and Silly Monks

-0.07

Correlation Coefficient

Sakar Healthcare  Silly Monks

Good diversification

The 3 months correlation between Sakar and Silly is -0.07. Overlapping area represents the amount of risk that can be diversified away by holding Sakar Healthcare Limited and Silly Monks Entertainment in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Silly Monks Entertainment and Sakar Healthcare 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 Sakar Healthcare Limited are associated (or correlated) with Silly Monks. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Silly Monks Entertainment has no effect on the direction of Sakar Healthcare i.e., Sakar Healthcare and Silly Monks go up and down completely randomly.

Pair Corralation between Sakar Healthcare and Silly Monks

Assuming the 90 days trading horizon Sakar Healthcare Limited is expected to under-perform the Silly Monks. But the stock apears to be less risky and, when comparing its historical volatility, Sakar Healthcare Limited is 2.71 times less risky than Silly Monks. The stock trades about -0.28 of its potential returns per unit of risk. The Silly Monks Entertainment is currently generating about 0.17 of returns per unit of risk over similar time horizon. If you would invest  2,138  in Silly Monks Entertainment on October 12, 2024 and sell it today you would earn a total of  272.00  from holding Silly Monks Entertainment or generate 12.72% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Sakar Healthcare Limited  vs.  Silly Monks Entertainment

Sakar Healthcare

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Sakar Healthcare Limited has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy forward-looking signals, Sakar Healthcare is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Silly Monks Entertainment

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Silly Monks Entertainment has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy basic indicators, Silly Monks is not utilizing all of its potentials. The newest stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Sakar Healthcare and Silly Monks

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

The idea behind Sakar Healthcare Limited and Silly Monks 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.

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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.