Correlation Between SIVERS SEMICONDUCTORS and COMPASS GROUP

Can any of the company-specific risk be diversified away by investing in both SIVERS SEMICONDUCTORS and COMPASS GROUP 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 COMPASS GROUP 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 COMPASS GROUP, you can compare the effects of market volatilities on SIVERS SEMICONDUCTORS and COMPASS GROUP 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 COMPASS GROUP. Check out your portfolio center. Please also check ongoing floating volatility patterns of SIVERS SEMICONDUCTORS and COMPASS GROUP.

Diversification Opportunities for SIVERS SEMICONDUCTORS and COMPASS GROUP

-0.84

Correlation Coefficient

SIVERS SEMICONDUCTORS  COMPASS GROUP

Pay attention - limited upside

The 3 months correlation between SIVERS and COMPASS is -0.84. Overlapping area represents the amount of risk that can be diversified away by holding SIVERS SEMICONDUCTORS AB and COMPASS GROUP in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on COMPASS GROUP 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 COMPASS GROUP. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of COMPASS GROUP has no effect on the direction of SIVERS SEMICONDUCTORS i.e., SIVERS SEMICONDUCTORS and COMPASS GROUP go up and down completely randomly.

Pair Corralation between SIVERS SEMICONDUCTORS and COMPASS GROUP

Assuming the 90 days horizon SIVERS SEMICONDUCTORS AB is expected to under-perform the COMPASS GROUP. In addition to that, SIVERS SEMICONDUCTORS is 5.64 times more volatile than COMPASS GROUP. It trades about 0.0 of its total potential returns per unit of risk. COMPASS GROUP is currently generating about 0.11 per unit of volatility. If you would invest  2,248  in COMPASS GROUP on October 5, 2024 and sell it today you would earn a total of  832.00  from holding COMPASS GROUP or generate 37.01% return on investment over 90 days.

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

SIVERS SEMICONDUCTORS AB  vs.  COMPASS GROUP

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 nearly stable basic indicators, SIVERS SEMICONDUCTORS is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

COMPASS GROUP

Risk-Adjusted Performance

0 of 100

Good

Over the last 90 days COMPASS GROUP has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly weak basic indicators, COMPASS GROUP reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with SIVERS SEMICONDUCTORS and COMPASS GROUP

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

The idea behind SIVERS SEMICONDUCTORS AB and COMPASS GROUP 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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.