Correlation Between SMC Entertainment and Cardiff Lexington

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

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

Diversification Opportunities for SMC Entertainment and Cardiff Lexington

0.45

Correlation Coefficient

SMC Entertainment  Cardiff Lexington

Very weak diversification

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

Pair Corralation between SMC Entertainment and Cardiff Lexington

Given the investment horizon of 90 days SMC Entertainment is expected to generate 6.4 times less return on investment than Cardiff Lexington. But when comparing it to its historical volatility, SMC Entertainment is 4.07 times less risky than Cardiff Lexington. It trades about 0.06 of its potential returns per unit of risk. Cardiff Lexington Corp is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest  0.11  in Cardiff Lexington Corp on September 14, 2024 and sell it today you would earn a total of  299.89  from holding Cardiff Lexington Corp or generate 272627.27% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	95.76%
Values	Daily Returns

SMC Entertainment  vs.  Cardiff Lexington 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.

Cardiff Lexington Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Cardiff Lexington Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong forward indicators, Cardiff Lexington is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with SMC Entertainment and Cardiff Lexington

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

The idea behind SMC Entertainment and Cardiff Lexington 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.

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 Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.