Correlation Between SMC Entertainment and Blackhawk Growth

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

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

Diversification Opportunities for SMC Entertainment and Blackhawk Growth

0.67

Correlation Coefficient

SMC Entertainment  Blackhawk Growth

Poor diversification

The 3 months correlation between SMC and Blackhawk is 0.67. Overlapping area represents the amount of risk that can be diversified away by holding SMC Entertainment and Blackhawk Growth Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Blackhawk Growth 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 Blackhawk Growth. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Blackhawk Growth Corp has no effect on the direction of SMC Entertainment i.e., SMC Entertainment and Blackhawk Growth go up and down completely randomly.

Pair Corralation between SMC Entertainment and Blackhawk Growth

Given the investment horizon of 90 days SMC Entertainment is expected to generate 0.86 times more return on investment than Blackhawk Growth. However, SMC Entertainment is 1.17 times less risky than Blackhawk Growth. It trades about -0.03 of its potential returns per unit of risk. Blackhawk Growth Corp is currently generating about -0.12 per unit of risk. If you would invest  0.19  in SMC Entertainment on September 16, 2024 and sell it today you would lose (0.07) from holding SMC Entertainment or give up 36.84% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	98.48%
Values	Daily Returns

SMC Entertainment  vs.  Blackhawk Growth 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.

Blackhawk Growth Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Blackhawk Growth Corp 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 January 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Pair Trading with SMC Entertainment and Blackhawk Growth

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

The idea behind SMC Entertainment and Blackhawk Growth 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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.