Correlation Between President Chain and Silergy Corp

Can any of the company-specific risk be diversified away by investing in both President Chain and Silergy Corp 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 President Chain and Silergy Corp into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between President Chain Store and Silergy Corp, you can compare the effects of market volatilities on President Chain and Silergy Corp 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 President Chain with a short position of Silergy Corp. Check out your portfolio center. Please also check ongoing floating volatility patterns of President Chain and Silergy Corp.

Diversification Opportunities for President Chain and Silergy Corp

0.59

Correlation Coefficient

President Chain  Silergy Corp

Very weak diversification

The 3 months correlation between President and Silergy is 0.59. Overlapping area represents the amount of risk that can be diversified away by holding President Chain Store and Silergy Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Silergy Corp and President Chain 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 President Chain Store are associated (or correlated) with Silergy Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Silergy Corp has no effect on the direction of President Chain i.e., President Chain and Silergy Corp go up and down completely randomly.

Pair Corralation between President Chain and Silergy Corp

Assuming the 90 days trading horizon President Chain is expected to generate 8.5 times less return on investment than Silergy Corp. But when comparing it to its historical volatility, President Chain Store is 4.68 times less risky than Silergy Corp. It trades about 0.12 of its potential returns per unit of risk. Silergy Corp is currently generating about 0.22 of returns per unit of risk over similar time horizon. If you would invest  37,600  in Silergy Corp on December 5, 2024 and sell it today you would earn a total of  6,300  from holding Silergy Corp or generate 16.76% return on investment over 90 days.

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

President Chain Store  vs.  Silergy Corp

President Chain Store

Risk-Adjusted Performance

Very Weak

Over the last 90 days President Chain Store has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable basic indicators, President Chain is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Silergy Corp

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Silergy Corp are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Silergy Corp may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with President Chain and Silergy Corp

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

The idea behind President Chain Store and Silergy Corp 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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.