Correlation Between SPORTING and ADHI KARYA

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

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

Diversification Opportunities for SPORTING and ADHI KARYA

0.7

Correlation Coefficient

SPORTING  ADHI KARYA

Poor diversification

The 3 months correlation between SPORTING and ADHI is 0.7. Overlapping area represents the amount of risk that can be diversified away by holding SPORTING and ADHI KARYA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ADHI KARYA and SPORTING 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 SPORTING are associated (or correlated) with ADHI KARYA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ADHI KARYA has no effect on the direction of SPORTING i.e., SPORTING and ADHI KARYA go up and down completely randomly.

Pair Corralation between SPORTING and ADHI KARYA

Assuming the 90 days trading horizon SPORTING is expected to generate 0.91 times more return on investment than ADHI KARYA. However, SPORTING is 1.1 times less risky than ADHI KARYA. It trades about -0.04 of its potential returns per unit of risk. ADHI KARYA is currently generating about -0.06 per unit of risk. If you would invest  104.00  in SPORTING on October 7, 2024 and sell it today you would lose (12.00) from holding SPORTING or give up 11.54% of portfolio value over 90 days.

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

SPORTING  vs.  ADHI KARYA

SPORTING

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days SPORTING has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unsteady performance, the Stock's technical and fundamental indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

ADHI KARYA

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days ADHI KARYA has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in February 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Pair Trading with SPORTING and ADHI KARYA

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

The idea behind SPORTING and ADHI KARYA 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 Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.