Correlation Between PARKEN Sport and SIMS METAL
Can any of the company-specific risk be diversified away by investing in both PARKEN Sport and SIMS METAL 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 PARKEN Sport and SIMS METAL into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between PARKEN Sport Entertainment and SIMS METAL MGT, you can compare the effects of market volatilities on PARKEN Sport and SIMS METAL 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 PARKEN Sport with a short position of SIMS METAL. Check out your portfolio center. Please also check ongoing floating volatility patterns of PARKEN Sport and SIMS METAL.
Diversification Opportunities for PARKEN Sport and SIMS METAL
0.63 | Correlation Coefficient |
Poor diversification
The 3 months correlation between PARKEN and SIMS is 0.63. Overlapping area represents the amount of risk that can be diversified away by holding PARKEN Sport Entertainment and SIMS METAL MGT in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SIMS METAL MGT and PARKEN Sport 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 PARKEN Sport Entertainment are associated (or correlated) with SIMS METAL. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SIMS METAL MGT has no effect on the direction of PARKEN Sport i.e., PARKEN Sport and SIMS METAL go up and down completely randomly.
Pair Corralation between PARKEN Sport and SIMS METAL
Assuming the 90 days horizon PARKEN Sport is expected to generate 3.68 times less return on investment than SIMS METAL. But when comparing it to its historical volatility, PARKEN Sport Entertainment is 1.1 times less risky than SIMS METAL. It trades about 0.04 of its potential returns per unit of risk. SIMS METAL MGT is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest 671.00 in SIMS METAL MGT on September 2, 2024 and sell it today you would earn a total of 139.00 from holding SIMS METAL MGT or generate 20.72% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
PARKEN Sport Entertainment vs. SIMS METAL MGT
Performance |
| Timeline |
| PARKEN Sport Enterta |
| SIMS METAL MGT |
PARKEN Sport and SIMS METAL Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with PARKEN Sport and SIMS METAL
The main advantage of trading using opposite PARKEN Sport and SIMS METAL positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if PARKEN Sport position performs unexpectedly, SIMS METAL 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 SIMS METAL will offset losses from the drop in SIMS METAL's long position.| PARKEN Sport vs. DAIRY FARM INTL | PARKEN Sport vs. Chongqing Machinery Electric | PARKEN Sport vs. Nufarm Limited | PARKEN Sport vs. CNVISION MEDIA |
| SIMS METAL vs. GFL ENVIRONM | SIMS METAL vs. Charter Communications | SIMS METAL vs. NIPPON STEEL SPADR | SIMS METAL vs. Entravision Communications |
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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.
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