Correlation Between Scientific Games and Sankyo

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

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

Diversification Opportunities for Scientific Games and Sankyo

0.06

Correlation Coefficient

Scientific Games  Sankyo

Significant diversification

The 3 months correlation between Scientific and Sankyo is 0.06. Overlapping area represents the amount of risk that can be diversified away by holding Scientific Games and Sankyo Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sankyo and Scientific Games 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 Scientific Games are associated (or correlated) with Sankyo. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sankyo has no effect on the direction of Scientific Games i.e., Scientific Games and Sankyo go up and down completely randomly.

Pair Corralation between Scientific Games and Sankyo

Assuming the 90 days horizon Scientific Games is expected to generate 1.18 times less return on investment than Sankyo. But when comparing it to its historical volatility, Scientific Games is 1.06 times less risky than Sankyo. It trades about 0.05 of its potential returns per unit of risk. Sankyo Co is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest  756.00  in Sankyo Co on September 23, 2024 and sell it today you would earn a total of  484.00  from holding Sankyo Co or generate 64.02% return on investment over 90 days.

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

Scientific Games  vs.  Sankyo Co

Scientific Games

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Scientific Games has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fragile performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Sankyo

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Sankyo Co has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Sankyo is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Scientific Games and Sankyo

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

The idea behind Scientific Games and Sankyo Co 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 Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.