Correlation Between Touchwood Entertainment and SEPC

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

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

Diversification Opportunities for Touchwood Entertainment and SEPC

0.52

Correlation Coefficient

Touchwood Entertainment  SEPC

Very weak diversification

The 3 months correlation between Touchwood and SEPC is 0.52. Overlapping area represents the amount of risk that can be diversified away by holding Touchwood Entertainment Limite and SEPC Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SEPC Limited and Touchwood 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 Touchwood Entertainment Limited are associated (or correlated) with SEPC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SEPC Limited has no effect on the direction of Touchwood Entertainment i.e., Touchwood Entertainment and SEPC go up and down completely randomly.

Pair Corralation between Touchwood Entertainment and SEPC

Assuming the 90 days trading horizon Touchwood Entertainment Limited is expected to under-perform the SEPC. But the stock apears to be less risky and, when comparing its historical volatility, Touchwood Entertainment Limited is 1.02 times less risky than SEPC. The stock trades about -0.25 of its potential returns per unit of risk. The SEPC Limited is currently generating about -0.11 of returns per unit of risk over similar time horizon. If you would invest  2,130  in SEPC Limited on December 25, 2024 and sell it today you would lose (628.00) from holding SEPC Limited or give up 29.48% of portfolio value over 90 days.

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

Touchwood Entertainment Limite  vs.  SEPC Limited

Touchwood Entertainment

Risk-Adjusted Performance

Very Weak

Over the last 90 days Touchwood Entertainment Limited 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 basic 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.

SEPC Limited

Risk-Adjusted Performance

Very Weak

Over the last 90 days SEPC Limited 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.

Pair Trading with Touchwood Entertainment and SEPC

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

The idea behind Touchwood Entertainment Limited and SEPC Limited 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.

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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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.