Correlation Between Silly Monks and Zodiac Clothing

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

Diversification Opportunities for Silly Monks and Zodiac Clothing

0.69

Correlation Coefficient

Silly Monks  Zodiac Clothing

Poor diversification

The 3 months correlation between Silly and Zodiac is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding Silly Monks Entertainment and Zodiac Clothing in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Zodiac Clothing 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 Zodiac Clothing. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Zodiac Clothing has no effect on the direction of Silly Monks i.e., Silly Monks and Zodiac Clothing go up and down completely randomly.

Pair Corralation between Silly Monks and Zodiac Clothing

Assuming the 90 days trading horizon Silly Monks Entertainment is expected to generate 1.1 times more return on investment than Zodiac Clothing. However, Silly Monks is 1.1 times more volatile than Zodiac Clothing. It trades about -0.08 of its potential returns per unit of risk. Zodiac Clothing is currently generating about -0.14 per unit of risk. If you would invest  2,169  in Silly Monks Entertainment on December 2, 2024 and sell it today you would lose (399.00) from holding Silly Monks Entertainment or give up 18.4% of portfolio value over 90 days.

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

Silly Monks Entertainment  vs.  Zodiac Clothing

Silly Monks Entertainment

Risk-Adjusted Performance

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 weak performance in the last few months, the Stock's basic indicators remain very healthy which may send shares a bit higher in April 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Zodiac Clothing

Risk-Adjusted Performance

Very Weak

Over the last 90 days Zodiac Clothing has generated negative risk-adjusted returns adding no value to investors with long positions. Despite inconsistent performance in the last few months, the Stock's basic indicators remain quite persistent which may send shares a bit higher in April 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Pair Trading with Silly Monks and Zodiac Clothing

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

The idea behind Silly Monks Entertainment and Zodiac Clothing 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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.