Correlation Between Superior Plus and Las Vegas

Can any of the company-specific risk be diversified away by investing in both Superior Plus and Las Vegas 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 Superior Plus and Las Vegas into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Superior Plus Corp and Las Vegas Sands, you can compare the effects of market volatilities on Superior Plus and Las Vegas 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 Superior Plus with a short position of Las Vegas. Check out your portfolio center. Please also check ongoing floating volatility patterns of Superior Plus and Las Vegas.

Diversification Opportunities for Superior Plus and Las Vegas

-0.38

Correlation Coefficient

Superior Plus  Las Vegas

Very good diversification

The 3 months correlation between Superior and Las is -0.38. Overlapping area represents the amount of risk that can be diversified away by holding Superior Plus Corp and Las Vegas Sands in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Las Vegas Sands and Superior Plus 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 Superior Plus Corp are associated (or correlated) with Las Vegas. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Las Vegas Sands has no effect on the direction of Superior Plus i.e., Superior Plus and Las Vegas go up and down completely randomly.

Pair Corralation between Superior Plus and Las Vegas

Assuming the 90 days horizon Superior Plus is expected to generate 1.65 times less return on investment than Las Vegas. In addition to that, Superior Plus is 1.12 times more volatile than Las Vegas Sands. It trades about 0.07 of its total potential returns per unit of risk. Las Vegas Sands is currently generating about 0.12 per unit of volatility. If you would invest  4,759  in Las Vegas Sands on September 22, 2024 and sell it today you would earn a total of  227.00  from holding Las Vegas Sands or generate 4.77% return on investment over 90 days.

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

Superior Plus Corp  vs.  Las Vegas Sands

Superior Plus Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Superior Plus Corp 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.

Las Vegas Sands

Risk-Adjusted Performance

16 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Las Vegas Sands are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Las Vegas reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Superior Plus and Las Vegas

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

The idea behind Superior Plus Corp and Las Vegas Sands 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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.