Correlation Between SkyCity Entertainment and KINDER

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

Diversification Opportunities for SkyCity Entertainment and KINDER

0.45

Correlation Coefficient

SkyCity Entertainment  KINDER

Very weak diversification

The 3 months correlation between SkyCity and KINDER is 0.45. Overlapping area represents the amount of risk that can be diversified away by holding SkyCity Entertainment Group and KINDER MORGAN ENERGY in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on KINDER MORGAN ENERGY 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 KINDER. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of KINDER MORGAN ENERGY has no effect on the direction of SkyCity Entertainment i.e., SkyCity Entertainment and KINDER go up and down completely randomly.

Pair Corralation between SkyCity Entertainment and KINDER

Assuming the 90 days horizon SkyCity Entertainment Group is expected to under-perform the KINDER. In addition to that, SkyCity Entertainment is 2.19 times more volatile than KINDER MORGAN ENERGY. It trades about -0.13 of its total potential returns per unit of risk. KINDER MORGAN ENERGY is currently generating about 0.05 per unit of volatility. If you would invest  10,486  in KINDER MORGAN ENERGY on December 25, 2024 and sell it today you would earn a total of  217.00  from holding KINDER MORGAN ENERGY or generate 2.07% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	71.67%
Values	Daily Returns

SkyCity Entertainment Group  vs.  KINDER MORGAN ENERGY

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. Despite fragile performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

KINDER MORGAN ENERGY

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in KINDER MORGAN ENERGY are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, KINDER is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with SkyCity Entertainment and KINDER

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

The idea behind SkyCity Entertainment Group and KINDER MORGAN ENERGY 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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.