Correlation Between Silly Monks and Kilitch Drugs

Can any of the company-specific risk be diversified away by investing in both Silly Monks and Kilitch Drugs 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 Kilitch Drugs 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 Kilitch Drugs Limited, you can compare the effects of market volatilities on Silly Monks and Kilitch Drugs 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 Kilitch Drugs. Check out your portfolio center. Please also check ongoing floating volatility patterns of Silly Monks and Kilitch Drugs.

Diversification Opportunities for Silly Monks and Kilitch Drugs

0.34

Correlation Coefficient

Silly Monks  Kilitch Drugs

Weak diversification

The 3 months correlation between Silly and Kilitch is 0.34. Overlapping area represents the amount of risk that can be diversified away by holding Silly Monks Entertainment and Kilitch Drugs Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kilitch Drugs 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 Kilitch Drugs. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kilitch Drugs Limited has no effect on the direction of Silly Monks i.e., Silly Monks and Kilitch Drugs go up and down completely randomly.

Pair Corralation between Silly Monks and Kilitch Drugs

Assuming the 90 days trading horizon Silly Monks Entertainment is expected to generate 2.35 times more return on investment than Kilitch Drugs. However, Silly Monks is 2.35 times more volatile than Kilitch Drugs Limited. It trades about 0.19 of its potential returns per unit of risk. Kilitch Drugs Limited is currently generating about 0.12 per unit of risk. If you would invest  2,202  in Silly Monks Entertainment on October 9, 2024 and sell it today you would earn a total of  330.00  from holding Silly Monks Entertainment or generate 14.99% return on investment over 90 days.

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

Silly Monks Entertainment  vs.  Kilitch Drugs Limited

Silly Monks Entertainment

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Silly Monks Entertainment are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of very inconsistent basic indicators, Silly Monks may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Kilitch Drugs Limited

Risk-Adjusted Performance

2 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Kilitch Drugs Limited are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite fairly strong basic indicators, Kilitch Drugs is not utilizing all of its potentials. The newest stock price confusion, may contribute to short-horizon losses for the traders.

Pair Trading with Silly Monks and Kilitch Drugs

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

The idea behind Silly Monks Entertainment and Kilitch Drugs 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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.