Correlation Between SMC Entertainment and Bounce Mobile

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

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

Diversification Opportunities for SMC Entertainment and Bounce Mobile

-0.59

Correlation Coefficient

SMC Entertainment  Bounce Mobile

Excellent diversification

The 3 months correlation between SMC and Bounce is -0.59. Overlapping area represents the amount of risk that can be diversified away by holding SMC Entertainment and Bounce Mobile Systems in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bounce Mobile Systems 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 Bounce Mobile. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bounce Mobile Systems has no effect on the direction of SMC Entertainment i.e., SMC Entertainment and Bounce Mobile go up and down completely randomly.

Pair Corralation between SMC Entertainment and Bounce Mobile

Given the investment horizon of 90 days SMC Entertainment is expected to generate 0.72 times more return on investment than Bounce Mobile. However, SMC Entertainment is 1.39 times less risky than Bounce Mobile. It trades about 0.08 of its potential returns per unit of risk. Bounce Mobile Systems is currently generating about 0.02 per unit of risk. If you would invest  0.15  in SMC Entertainment on December 27, 2024 and sell it today you would earn a total of  0.03  from holding SMC Entertainment or generate 20.0% return on investment over 90 days.

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

SMC Entertainment  vs.  Bounce Mobile Systems

SMC Entertainment

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in SMC Entertainment are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of rather conflicting fundamental indicators, SMC Entertainment exhibited solid returns over the last few months and may actually be approaching a breakup point.

Bounce Mobile Systems

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Bounce Mobile Systems are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of very weak fundamental indicators, Bounce Mobile displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with SMC Entertainment and Bounce Mobile

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

The idea behind SMC Entertainment and Bounce Mobile Systems 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.

Check out your portfolio center.

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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.