Correlation Between SMC Entertainment and MFS High

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

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

Diversification Opportunities for SMC Entertainment and MFS High

0.03

Correlation Coefficient

SMC Entertainment  MFS High

Significant diversification

The 3 months correlation between SMC and MFS is 0.03. Overlapping area represents the amount of risk that can be diversified away by holding SMC Entertainment and MFS High Yield in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MFS High Yield 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 MFS High. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MFS High Yield has no effect on the direction of SMC Entertainment i.e., SMC Entertainment and MFS High go up and down completely randomly.

Pair Corralation between SMC Entertainment and MFS High

Given the investment horizon of 90 days SMC Entertainment is expected to under-perform the MFS High. In addition to that, SMC Entertainment is 14.67 times more volatile than MFS High Yield. It trades about -0.1 of its total potential returns per unit of risk. MFS High Yield is currently generating about 0.08 per unit of volatility. If you would invest  357.00  in MFS High Yield on September 15, 2024 and sell it today you would earn a total of  3.00  from holding MFS High Yield or generate 0.84% return on investment over 90 days.

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

SMC Entertainment  vs.  MFS High Yield

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.

MFS High Yield

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days MFS High Yield has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable primary indicators, MFS High is not utilizing all of its potentials. The latest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with SMC Entertainment and MFS High

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

The idea behind SMC Entertainment and MFS High Yield 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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.