Correlation Between Skycity Entertainment and Centrex Metals

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

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

Diversification Opportunities for Skycity Entertainment and Centrex Metals

-0.23

Correlation Coefficient

Skycity Entertainment  Centrex Metals

Very good diversification

The 3 months correlation between Skycity and Centrex is -0.23. Overlapping area represents the amount of risk that can be diversified away by holding Skycity Entertainment Group and Centrex Metals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Centrex Metals and Skycity Entertainment 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 Skycity Entertainment Group are associated (or correlated) with Centrex Metals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Centrex Metals has no effect on the direction of Skycity Entertainment i.e., Skycity Entertainment and Centrex Metals go up and down completely randomly.

Pair Corralation between Skycity Entertainment and Centrex Metals

Assuming the 90 days trading horizon Skycity Entertainment Group is expected to under-perform the Centrex Metals. But the stock apears to be less risky and, when comparing its historical volatility, Skycity Entertainment Group is 1.33 times less risky than Centrex Metals. The stock trades about -0.08 of its potential returns per unit of risk. The Centrex Metals is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest  1.70  in Centrex Metals on December 22, 2024 and sell it today you would earn a total of  0.00  from holding Centrex Metals or generate 0.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.39%
Values	Daily Returns

Skycity Entertainment Group  vs.  Centrex Metals

Skycity Entertainment

Risk-Adjusted Performance

Very Weak

Over the last 90 days Skycity Entertainment Group has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest uncertain performance, the Stock's 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.

Centrex Metals

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Centrex Metals are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable primary indicators, Centrex Metals is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Skycity Entertainment and Centrex Metals

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

The idea behind Skycity Entertainment Group and Centrex Metals 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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.