Correlation Between Sony Group and Singing Machine

Can any of the company-specific risk be diversified away by investing in both Sony Group 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 Group 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 Group Corp and The Singing Machine, you can compare the effects of market volatilities on Sony Group 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 Group with a short position of Singing Machine. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sony Group and Singing Machine.

Diversification Opportunities for Sony Group and Singing Machine

0.11

Correlation Coefficient

Sony Group  Singing Machine

Average diversification

The 3 months correlation between Sony and Singing is 0.11. Overlapping area represents the amount of risk that can be diversified away by holding Sony Group 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 Group 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 Group 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 Group i.e., Sony Group and Singing Machine go up and down completely randomly.

Pair Corralation between Sony Group and Singing Machine

Given the investment horizon of 90 days Sony Group Corp is expected to generate 0.19 times more return on investment than Singing Machine. However, Sony Group Corp is 5.33 times less risky than Singing Machine. It trades about 0.02 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  1,951  in Sony Group Corp on August 30, 2024 and sell it today you would earn a total of  25.00  from holding Sony Group Corp or generate 1.28% return on investment over 90 days.

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

Sony Group Corp  vs.  The Singing Machine

Sony Group Corp

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Sony Group Corp are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of fairly strong basic indicators, Sony Group is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

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 Group and Singing Machine

The main advantage of trading using opposite Sony Group and Singing Machine positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sony Group 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 Group 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.

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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.