Correlation Between Sphere Entertainment and Caravelle International

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

By analyzing existing cross correlation between Sphere Entertainment Co and Caravelle International Group, you can compare the effects of market volatilities on Sphere Entertainment and Caravelle International 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 Sphere Entertainment with a short position of Caravelle International. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sphere Entertainment and Caravelle International.

Diversification Opportunities for Sphere Entertainment and Caravelle International

0.76

Correlation Coefficient

Sphere Entertainment  Caravelle International

Poor diversification

The 3 months correlation between Sphere and Caravelle is 0.76. Overlapping area represents the amount of risk that can be diversified away by holding Sphere Entertainment Co and Caravelle International Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Caravelle International and Sphere 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 Sphere Entertainment Co are associated (or correlated) with Caravelle International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Caravelle International has no effect on the direction of Sphere Entertainment i.e., Sphere Entertainment and Caravelle International go up and down completely randomly.

Pair Corralation between Sphere Entertainment and Caravelle International

Given the investment horizon of 90 days Sphere Entertainment Co is expected to generate 0.27 times more return on investment than Caravelle International. However, Sphere Entertainment Co is 3.74 times less risky than Caravelle International. It trades about -0.08 of its potential returns per unit of risk. Caravelle International Group is currently generating about -0.1 per unit of risk. If you would invest  4,015  in Sphere Entertainment Co on December 29, 2024 and sell it today you would lose (637.00) from holding Sphere Entertainment Co or give up 15.87% of portfolio value over 90 days.

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

Sphere Entertainment Co  vs.  Caravelle International Group

Sphere Entertainment

Risk-Adjusted Performance

Very Weak

Over the last 90 days Sphere Entertainment Co has generated negative risk-adjusted returns adding no value to investors with long positions. Even with weak performance in the last few months, the Stock's technical indicators remain relatively invariable which may send shares a bit higher in April 2025. The latest agitation may also be a sign of long-running up-swing for the enterprise retail investors.

Caravelle International

Risk-Adjusted Performance

Very Weak

Over the last 90 days Caravelle International Group has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's fundamental indicators remain very healthy which may send shares a bit higher in April 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Pair Trading with Sphere Entertainment and Caravelle International

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

The idea behind Sphere Entertainment Co and Caravelle International Group 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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.