Correlation Between SMC Entertainment and One Step

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

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

Diversification Opportunities for SMC Entertainment and One Step

0.42

Correlation Coefficient

SMC Entertainment  One Step

Very weak diversification

The 3 months correlation between SMC and One is 0.42. Overlapping area represents the amount of risk that can be diversified away by holding SMC Entertainment and One Step Vending in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on One Step Vending 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 One Step. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of One Step Vending has no effect on the direction of SMC Entertainment i.e., SMC Entertainment and One Step go up and down completely randomly.

Pair Corralation between SMC Entertainment and One Step

Given the investment horizon of 90 days SMC Entertainment is expected to under-perform the One Step. But the pink sheet apears to be less risky and, when comparing its historical volatility, SMC Entertainment is 2.28 times less risky than One Step. The pink sheet trades about -0.03 of its potential returns per unit of risk. The One Step Vending is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest  0.48  in One Step Vending on September 15, 2024 and sell it today you would lose (0.22) from holding One Step Vending or give up 45.83% of portfolio value over 90 days.

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

SMC Entertainment  vs.  One Step Vending

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.

One Step Vending

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in One Step Vending are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite quite weak basic indicators, One Step disclosed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with SMC Entertainment and One Step

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

The idea behind SMC Entertainment and One Step Vending 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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.