Correlation Between Sony Corp and Singing Machine

Can any of the company-specific risk be diversified away by investing in both Sony Corp and Singing Machine 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 Sony Corp and Singing Machine into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Sony Corp and The Singing Machine, you can compare the effects of market volatilities on Sony Corp and Singing Machine 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 Sony Corp with a short position of Singing Machine. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sony Corp and Singing Machine.

Diversification Opportunities for Sony Corp and Singing Machine

0.0

Correlation Coefficient

Sony Corp  Singing Machine

Pay attention - limited upside

The 3 months correlation between Sony and Singing is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Sony Corp and The Singing Machine in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Singing Machine and Sony Corp 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 Sony Corp are associated (or correlated) with Singing Machine. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Singing Machine has no effect on the direction of Sony Corp i.e., Sony Corp and Singing Machine go up and down completely randomly.

Pair Corralation between Sony Corp and Singing Machine

Assuming the 90 days horizon Sony Corp is expected to generate 9.03 times more return on investment than Singing Machine. However, Sony Corp is 9.03 times more volatile than The Singing Machine. It trades about 0.16 of its potential returns per unit of risk. The Singing Machine is currently generating about -0.18 per unit of risk. If you would invest  9,483  in Sony Corp on August 30, 2024 and sell it today you would lose (7,410) from holding Sony Corp or give up 78.14% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	80.95%
Values	Daily Returns

Sony Corp  vs.  The Singing Machine

Sony Corp

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Sony Corp are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Despite nearly conflicting forward-looking indicators, Sony Corp reported solid returns over the last few months and may actually be approaching a breakup point.

Singing Machine

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days The Singing Machine has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's fundamental indicators remain comparatively stable which may send shares a bit higher in December 2024. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Pair Trading with Sony Corp and Singing Machine

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

The idea behind Sony Corp and The Singing Machine 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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.