Correlation Between SK Growth and Four Leaf

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

By analyzing existing cross correlation between SK Growth Opportunities and Four Leaf Acquisition, you can compare the effects of market volatilities on SK Growth and Four Leaf 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 SK Growth with a short position of Four Leaf. Check out your portfolio center. Please also check ongoing floating volatility patterns of SK Growth and Four Leaf.

Diversification Opportunities for SK Growth and Four Leaf

0.5

Correlation Coefficient

SK Growth  Four Leaf

Very weak diversification

The 3 months correlation between SKGR and Four is 0.5. Overlapping area represents the amount of risk that can be diversified away by holding SK Growth Opportunities and Four Leaf Acquisition in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Four Leaf Acquisition and SK Growth 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 SK Growth Opportunities are associated (or correlated) with Four Leaf. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Four Leaf Acquisition has no effect on the direction of SK Growth i.e., SK Growth and Four Leaf go up and down completely randomly.

Pair Corralation between SK Growth and Four Leaf

Given the investment horizon of 90 days SK Growth Opportunities is expected to generate 2.85 times more return on investment than Four Leaf. However, SK Growth is 2.85 times more volatile than Four Leaf Acquisition. It trades about 0.07 of its potential returns per unit of risk. Four Leaf Acquisition is currently generating about 0.13 per unit of risk. If you would invest  1,082  in SK Growth Opportunities on September 14, 2024 and sell it today you would earn a total of  81.00  from holding SK Growth Opportunities or generate 7.49% return on investment over 90 days.

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

SK Growth Opportunities  vs.  Four Leaf Acquisition

SK Growth Opportunities

Risk-Adjusted Performance

20 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in SK Growth Opportunities are ranked lower than 20 (%) of all global equities and portfolios over the last 90 days. Even with relatively invariable technical and fundamental indicators, SK Growth is not utilizing all of its potentials. The newest stock price agitation, may contribute to short-term losses for the retail investors.

Four Leaf Acquisition

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Four Leaf Acquisition are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable essential indicators, Four Leaf is not utilizing all of its potentials. The latest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with SK Growth and Four Leaf

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

The idea behind SK Growth Opportunities and Four Leaf Acquisition 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 Portfolio Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.