Correlation Between Step One and Skycity Entertainment

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

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

Diversification Opportunities for Step One and Skycity Entertainment

0.89

Correlation Coefficient

Step One  Skycity Entertainment

Very poor diversification

The 3 months correlation between Step and Skycity is 0.89. Overlapping area represents the amount of risk that can be diversified away by holding Step One Clothing and Skycity Entertainment Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Skycity Entertainment and Step One 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 Step One Clothing are associated (or correlated) with Skycity Entertainment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Skycity Entertainment has no effect on the direction of Step One i.e., Step One and Skycity Entertainment go up and down completely randomly.

Pair Corralation between Step One and Skycity Entertainment

Assuming the 90 days trading horizon Step One Clothing is expected to under-perform the Skycity Entertainment. In addition to that, Step One is 2.3 times more volatile than Skycity Entertainment Group. It trades about -0.09 of its total potential returns per unit of risk. Skycity Entertainment Group is currently generating about -0.08 per unit of volatility. If you would invest  128.00  in Skycity Entertainment Group on December 29, 2024 and sell it today you would lose (14.00) from holding Skycity Entertainment Group or give up 10.94% of portfolio value over 90 days.

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

Step One Clothing  vs.  Skycity Entertainment Group

Step One Clothing

Risk-Adjusted Performance

Very Weak

Over the last 90 days Step One Clothing 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 basic indicators remain comparatively stable which may send shares a bit higher in April 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Skycity Entertainment

Risk-Adjusted Performance

Very Weak

Over the last 90 days Skycity Entertainment Group has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest uncertain performance, the Stock's fundamental indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Pair Trading with Step One and Skycity Entertainment

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

The idea behind Step One Clothing and Skycity Entertainment 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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.