Correlation Between SFP Tech and Silver Ridge

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

By analyzing existing cross correlation between SFP Tech Holdings and Silver Ridge Holdings, you can compare the effects of market volatilities on SFP Tech and Silver Ridge 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 SFP Tech with a short position of Silver Ridge. Check out your portfolio center. Please also check ongoing floating volatility patterns of SFP Tech and Silver Ridge.

Diversification Opportunities for SFP Tech and Silver Ridge

-0.29

Correlation Coefficient

SFP Tech  Silver Ridge

Very good diversification

The 3 months correlation between SFP and Silver is -0.29. Overlapping area represents the amount of risk that can be diversified away by holding SFP Tech Holdings and Silver Ridge Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Silver Ridge Holdings and SFP Tech 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 SFP Tech Holdings are associated (or correlated) with Silver Ridge. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Silver Ridge Holdings has no effect on the direction of SFP Tech i.e., SFP Tech and Silver Ridge go up and down completely randomly.

Pair Corralation between SFP Tech and Silver Ridge

Assuming the 90 days trading horizon SFP Tech Holdings is expected to under-perform the Silver Ridge. But the stock apears to be less risky and, when comparing its historical volatility, SFP Tech Holdings is 1.24 times less risky than Silver Ridge. The stock trades about -0.32 of its potential returns per unit of risk. The Silver Ridge Holdings is currently generating about -0.03 of returns per unit of risk over similar time horizon. If you would invest  64.00  in Silver Ridge Holdings on December 2, 2024 and sell it today you would lose (9.00) from holding Silver Ridge Holdings or give up 14.06% of portfolio value over 90 days.

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

SFP Tech Holdings  vs.  Silver Ridge Holdings

SFP Tech Holdings

Risk-Adjusted Performance

Very Weak

Over the last 90 days SFP Tech Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. Despite conflicting performance in the last few months, the Stock's basic indicators remain quite persistent which may send shares a bit higher in April 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Silver Ridge Holdings

Risk-Adjusted Performance

Very Weak

Over the last 90 days Silver Ridge Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest conflicting performance, the Stock's basic indicators remain persistent and the latest mess on Wall Street may also be a sign of long-standing gains for the company institutional investors.

Pair Trading with SFP Tech and Silver Ridge

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

The idea behind SFP Tech Holdings and Silver Ridge Holdings 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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.