Correlation Between Silly Monks and Aban Offshore

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

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

Diversification Opportunities for Silly Monks and Aban Offshore

-0.2

Correlation Coefficient

Silly Monks  Aban Offshore

Good diversification

The 3 months correlation between Silly and Aban is -0.2. Overlapping area represents the amount of risk that can be diversified away by holding Silly Monks Entertainment and Aban Offshore Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aban Offshore Limited and Silly Monks 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 Silly Monks Entertainment are associated (or correlated) with Aban Offshore. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aban Offshore Limited has no effect on the direction of Silly Monks i.e., Silly Monks and Aban Offshore go up and down completely randomly.

Pair Corralation between Silly Monks and Aban Offshore

Assuming the 90 days trading horizon Silly Monks Entertainment is expected to generate 1.22 times more return on investment than Aban Offshore. However, Silly Monks is 1.22 times more volatile than Aban Offshore Limited. It trades about 0.02 of its potential returns per unit of risk. Aban Offshore Limited is currently generating about -0.09 per unit of risk. If you would invest  2,308  in Silly Monks Entertainment on October 21, 2024 and sell it today you would earn a total of  2.00  from holding Silly Monks Entertainment or generate 0.09% return on investment over 90 days.

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

Silly Monks Entertainment  vs.  Aban Offshore Limited

Silly Monks Entertainment

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Silly Monks Entertainment are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy basic indicators, Silly Monks is not utilizing all of its potentials. The current stock price disarray, may contribute to short-term losses for the investors.

Aban Offshore Limited

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Aban Offshore Limited has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak 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 Silly Monks and Aban Offshore

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

The idea behind Silly Monks Entertainment and Aban Offshore Limited 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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.