Correlation Between Skycity Entertainment and Step One
Can any of the company-specific risk be diversified away by investing in both Skycity Entertainment and Step One 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 Skycity Entertainment and Step One into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Skycity Entertainment Group and Step One Clothing, you can compare the effects of market volatilities on Skycity Entertainment and Step One 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 Skycity Entertainment with a short position of Step One. Check out your portfolio center. Please also check ongoing floating volatility patterns of Skycity Entertainment and Step One.
Diversification Opportunities for Skycity Entertainment and Step One
0.1 | Correlation Coefficient |
Average diversification
The 3 months correlation between Skycity and Step is 0.1. Overlapping area represents the amount of risk that can be diversified away by holding Skycity Entertainment Group and Step One Clothing in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Step One Clothing and Skycity 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 Skycity Entertainment Group are associated (or correlated) with Step One. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Step One Clothing has no effect on the direction of Skycity Entertainment i.e., Skycity Entertainment and Step One go up and down completely randomly.
Pair Corralation between Skycity Entertainment and Step One
Assuming the 90 days trading horizon Skycity Entertainment Group is expected to under-perform the Step One. But the stock apears to be less risky and, when comparing its historical volatility, Skycity Entertainment Group is 1.47 times less risky than Step One. The stock trades about -0.03 of its potential returns per unit of risk. The Step One Clothing is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest 136.00 in Step One Clothing on September 3, 2024 and sell it today you would earn a total of 4.00 from holding Step One Clothing or generate 2.94% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Skycity Entertainment Group vs. Step One Clothing
Performance |
| Timeline |
| Skycity Entertainment |
| Step One Clothing |
Skycity Entertainment and Step One Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Skycity Entertainment and Step One
The main advantage of trading using opposite Skycity Entertainment and Step One positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Skycity Entertainment position performs unexpectedly, Step One 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 Step One will offset losses from the drop in Step One's long position.| Skycity Entertainment vs. Westpac Banking | Skycity Entertainment vs. Champion Iron | Skycity Entertainment vs. iShares Global Healthcare | Skycity Entertainment vs. Peel Mining |
| Step One vs. Perpetual Credit Income | Step One vs. Alto Metals | Step One vs. Finexia Financial Group | Step One vs. G8 Education |
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 Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.
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