Correlation Between Sound Point and SK Growth
Can any of the company-specific risk be diversified away by investing in both Sound Point and SK Growth 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 Sound Point and SK Growth into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Sound Point Acquisition and SK Growth Opportunities, you can compare the effects of market volatilities on Sound Point and SK Growth 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 Sound Point with a short position of SK Growth. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sound Point and SK Growth.
Diversification Opportunities for Sound Point and SK Growth
0.48 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Sound and SKGR is 0.48. Overlapping area represents the amount of risk that can be diversified away by holding Sound Point Acquisition and SK Growth Opportunities in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SK Growth Opportunities and Sound Point 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 Sound Point Acquisition are associated (or correlated) with SK Growth. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SK Growth Opportunities has no effect on the direction of Sound Point i.e., Sound Point and SK Growth go up and down completely randomly.
Pair Corralation between Sound Point and SK Growth
Assuming the 90 days horizon Sound Point is expected to generate 1.12 times less return on investment than SK Growth. In addition to that, Sound Point is 1.47 times more volatile than SK Growth Opportunities. It trades about 0.04 of its total potential returns per unit of risk. SK Growth Opportunities is currently generating about 0.06 per unit of volatility. If you would invest 1,026 in SK Growth Opportunities on September 3, 2024 and sell it today you would earn a total of 128.00 from holding SK Growth Opportunities or generate 12.48% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 21.89% |
| Values | Daily Returns |
Sound Point Acquisition vs. SK Growth Opportunities
Performance |
| Timeline |
| Sound Point Acquisition |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
| SK Growth Opportunities |
Sound Point and SK Growth Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sound Point and SK Growth
The main advantage of trading using opposite Sound Point and SK Growth positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sound Point position performs unexpectedly, SK Growth 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 SK Growth will offset losses from the drop in SK Growth's long position.The idea behind Sound Point Acquisition and SK Growth Opportunities 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.| SK Growth vs. Four Leaf Acquisition | SK Growth vs. WinVest Acquisition Corp | SK Growth vs. Thunder Bridge Capital | SK Growth vs. Pearl Holdings Acquisition |
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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.
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