Correlation Between SIVERS SEMICONDUCTORS and Colgate Palmolive

Can any of the company-specific risk be diversified away by investing in both SIVERS SEMICONDUCTORS and Colgate Palmolive 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 SIVERS SEMICONDUCTORS and Colgate Palmolive into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between SIVERS SEMICONDUCTORS AB and Colgate Palmolive, you can compare the effects of market volatilities on SIVERS SEMICONDUCTORS and Colgate Palmolive 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 SIVERS SEMICONDUCTORS with a short position of Colgate Palmolive. Check out your portfolio center. Please also check ongoing floating volatility patterns of SIVERS SEMICONDUCTORS and Colgate Palmolive.

Diversification Opportunities for SIVERS SEMICONDUCTORS and Colgate Palmolive

0.53

Correlation Coefficient

SIVERS SEMICONDUCTORS  Colgate Palmolive

Very weak diversification

The 3 months correlation between SIVERS and Colgate is 0.53. Overlapping area represents the amount of risk that can be diversified away by holding SIVERS SEMICONDUCTORS AB and Colgate Palmolive in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Colgate Palmolive and SIVERS SEMICONDUCTORS 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 SIVERS SEMICONDUCTORS AB are associated (or correlated) with Colgate Palmolive. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Colgate Palmolive has no effect on the direction of SIVERS SEMICONDUCTORS i.e., SIVERS SEMICONDUCTORS and Colgate Palmolive go up and down completely randomly.

Pair Corralation between SIVERS SEMICONDUCTORS and Colgate Palmolive

Assuming the 90 days horizon SIVERS SEMICONDUCTORS AB is expected to under-perform the Colgate Palmolive. In addition to that, SIVERS SEMICONDUCTORS is 10.18 times more volatile than Colgate Palmolive. It trades about -0.07 of its total potential returns per unit of risk. Colgate Palmolive is currently generating about 0.21 per unit of volatility. If you would invest  8,589  in Colgate Palmolive on September 5, 2024 and sell it today you would earn a total of  511.00  from holding Colgate Palmolive or generate 5.95% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	95.65%
Values	Daily Returns

SIVERS SEMICONDUCTORS AB  vs.  Colgate Palmolive

SIVERS SEMICONDUCTORS

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days SIVERS SEMICONDUCTORS AB has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fragile performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Colgate Palmolive

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Colgate Palmolive has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest fragile performance, the Stock's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Pair Trading with SIVERS SEMICONDUCTORS and Colgate Palmolive

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

The idea behind SIVERS SEMICONDUCTORS AB and Colgate Palmolive 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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.