Correlation Between SV Investment and Raphas Co

Can any of the company-specific risk be diversified away by investing in both SV Investment and Raphas Co 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 SV Investment and Raphas Co into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between SV Investment and Raphas Co, you can compare the effects of market volatilities on SV Investment and Raphas Co 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 SV Investment with a short position of Raphas Co. Check out your portfolio center. Please also check ongoing floating volatility patterns of SV Investment and Raphas Co.

Diversification Opportunities for SV Investment and Raphas Co

0.78

Correlation Coefficient

SV Investment  Raphas Co

Poor diversification

The 3 months correlation between 289080 and Raphas is 0.78. Overlapping area represents the amount of risk that can be diversified away by holding SV Investment and Raphas Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Raphas Co and SV Investment 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 SV Investment are associated (or correlated) with Raphas Co. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Raphas Co has no effect on the direction of SV Investment i.e., SV Investment and Raphas Co go up and down completely randomly.

Pair Corralation between SV Investment and Raphas Co

Assuming the 90 days trading horizon SV Investment is expected to generate 0.46 times more return on investment than Raphas Co. However, SV Investment is 2.17 times less risky than Raphas Co. It trades about -0.13 of its potential returns per unit of risk. Raphas Co is currently generating about -0.06 per unit of risk. If you would invest  165,700  in SV Investment on September 15, 2024 and sell it today you would lose (32,400) from holding SV Investment or give up 19.55% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	98.33%
Values	Daily Returns

SV Investment  vs.  Raphas Co

SV Investment

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days SV Investment has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain somewhat strong which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Raphas Co

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Raphas Co has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain somewhat strong which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with SV Investment and Raphas Co

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

The idea behind SV Investment and Raphas Co 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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.