Correlation Between Strategic Investments and PARKEN Sport

Can any of the company-specific risk be diversified away by investing in both Strategic Investments and PARKEN Sport 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 Strategic Investments and PARKEN Sport into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Strategic Investments AS and PARKEN Sport Entertainment, you can compare the effects of market volatilities on Strategic Investments and PARKEN Sport 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 Strategic Investments with a short position of PARKEN Sport. Check out your portfolio center. Please also check ongoing floating volatility patterns of Strategic Investments and PARKEN Sport.

Diversification Opportunities for Strategic Investments and PARKEN Sport

0.05

Correlation Coefficient

Strategic Investments  PARKEN Sport

Significant diversification

The 3 months correlation between Strategic and PARKEN is 0.05. Overlapping area represents the amount of risk that can be diversified away by holding Strategic Investments AS and PARKEN Sport Entertainment in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PARKEN Sport Enterta and Strategic Investments 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 Strategic Investments AS are associated (or correlated) with PARKEN Sport. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PARKEN Sport Enterta has no effect on the direction of Strategic Investments i.e., Strategic Investments and PARKEN Sport go up and down completely randomly.

Pair Corralation between Strategic Investments and PARKEN Sport

Assuming the 90 days trading horizon Strategic Investments AS is expected to under-perform the PARKEN Sport. In addition to that, Strategic Investments is 1.23 times more volatile than PARKEN Sport Entertainment. It trades about -0.04 of its total potential returns per unit of risk. PARKEN Sport Entertainment is currently generating about 0.12 per unit of volatility. If you would invest  12,100  in PARKEN Sport Entertainment on December 1, 2024 and sell it today you would earn a total of  1,650  from holding PARKEN Sport Entertainment or generate 13.64% return on investment over 90 days.

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

Strategic Investments AS  vs.  PARKEN Sport Entertainment

Strategic Investments

Risk-Adjusted Performance

Very Weak

Over the last 90 days Strategic Investments AS has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Strategic Investments is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

PARKEN Sport Enterta

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in PARKEN Sport Entertainment are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite somewhat unfluctuating basic indicators, PARKEN Sport sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Strategic Investments and PARKEN Sport

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

The idea behind Strategic Investments AS and PARKEN Sport Entertainment 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 Portfolio Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.