Correlation Between Azvalor Global and SISF BRIC

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

By analyzing existing cross correlation between Azvalor Global Value and SISF BRIC AC, you can compare the effects of market volatilities on Azvalor Global and SISF BRIC 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 Azvalor Global with a short position of SISF BRIC. Check out your portfolio center. Please also check ongoing floating volatility patterns of Azvalor Global and SISF BRIC.

Diversification Opportunities for Azvalor Global and SISF BRIC

0.33

Correlation Coefficient

Azvalor Global  SISF BRIC

Weak diversification

The 3 months correlation between Azvalor and SISF is 0.33. Overlapping area represents the amount of risk that can be diversified away by holding Azvalor Global Value and SISF BRIC AC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SISF BRIC AC and Azvalor Global 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 Azvalor Global Value are associated (or correlated) with SISF BRIC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SISF BRIC AC has no effect on the direction of Azvalor Global i.e., Azvalor Global and SISF BRIC go up and down completely randomly.

Pair Corralation between Azvalor Global and SISF BRIC

Assuming the 90 days trading horizon Azvalor Global Value is expected to under-perform the SISF BRIC. But the fund apears to be less risky and, when comparing its historical volatility, Azvalor Global Value is 1.73 times less risky than SISF BRIC. The fund trades about -0.39 of its potential returns per unit of risk. The SISF BRIC AC is currently generating about -0.01 of returns per unit of risk over similar time horizon. If you would invest  21,460  in SISF BRIC AC on September 26, 2024 and sell it today you would lose (88.00) from holding SISF BRIC AC or give up 0.41% of portfolio value over 90 days.

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

Azvalor Global Value  vs.  SISF BRIC AC

Azvalor Global Value

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Azvalor Global Value has generated negative risk-adjusted returns adding no value to fund investors. Despite somewhat strong basic indicators, Azvalor Global is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

SISF BRIC AC

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in SISF BRIC AC are ranked lower than 1 (%) of all funds and portfolios of funds over the last 90 days. In spite of rather sound technical and fundamental indicators, SISF BRIC is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Azvalor Global and SISF BRIC

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

The idea behind Azvalor Global Value and SISF BRIC AC 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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.