Correlation Between SMC Entertainment and Flow Capital

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

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

Diversification Opportunities for SMC Entertainment and Flow Capital

0.0

Correlation Coefficient

SMC Entertainment  Flow Capital

Pay attention - limited upside

The 3 months correlation between SMC and Flow is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding SMC Entertainment and Flow Capital Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Flow Capital Corp and SMC 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 SMC Entertainment are associated (or correlated) with Flow Capital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Flow Capital Corp has no effect on the direction of SMC Entertainment i.e., SMC Entertainment and Flow Capital go up and down completely randomly.

Pair Corralation between SMC Entertainment and Flow Capital

Given the investment horizon of 90 days SMC Entertainment is expected to under-perform the Flow Capital. In addition to that, SMC Entertainment is 21.02 times more volatile than Flow Capital Corp. It trades about -0.06 of its total potential returns per unit of risk. Flow Capital Corp is currently generating about -0.22 per unit of volatility. If you would invest  61.00  in Flow Capital Corp on September 16, 2024 and sell it today you would lose (1.00) from holding Flow Capital Corp or give up 1.64% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

SMC Entertainment  vs.  Flow Capital Corp

SMC Entertainment

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days SMC Entertainment has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of conflicting performance in the last few months, the Stock's fundamental indicators remain rather sound which may send shares a bit higher in January 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Flow Capital Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Flow Capital Corp has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable fundamental indicators, Flow Capital is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with SMC Entertainment and Flow Capital

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

The idea behind SMC Entertainment and Flow Capital Corp 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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.