Correlation Between Armada Hflr and Sidma SA

Can any of the company-specific risk be diversified away by investing in both Armada Hflr and Sidma SA 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 Armada Hflr and Sidma SA into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Armada Hflr Pr and Sidma SA Steel, you can compare the effects of market volatilities on Armada Hflr and Sidma SA 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 Armada Hflr with a short position of Sidma SA. Check out your portfolio center. Please also check ongoing floating volatility patterns of Armada Hflr and Sidma SA.

Diversification Opportunities for Armada Hflr and Sidma SA

0.16

Correlation Coefficient

Armada Hflr  Sidma SA

Average diversification

The 3 months correlation between Armada and Sidma is 0.16. Overlapping area represents the amount of risk that can be diversified away by holding Armada Hflr Pr and Sidma SA Steel in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sidma SA Steel and Armada Hflr 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 Armada Hflr Pr are associated (or correlated) with Sidma SA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sidma SA Steel has no effect on the direction of Armada Hflr i.e., Armada Hflr and Sidma SA go up and down completely randomly.

Pair Corralation between Armada Hflr and Sidma SA

Considering the 90-day investment horizon Armada Hflr Pr is expected to under-perform the Sidma SA. But the stock apears to be less risky and, when comparing its historical volatility, Armada Hflr Pr is 1.09 times less risky than Sidma SA. The stock trades about -0.08 of its potential returns per unit of risk. The Sidma SA Steel is currently generating about 0.0 of returns per unit of risk over similar time horizon. If you would invest  161.00  in Sidma SA Steel on September 14, 2024 and sell it today you would lose (1.00) from holding Sidma SA Steel or give up 0.62% of portfolio value over 90 days.

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

Armada Hflr Pr  vs.  Sidma SA Steel

Armada Hflr Pr

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Armada Hflr Pr has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's technical indicators remain strong and the recent confusion on Wall Street may also be a sign of long-lasting gains for the firm traders.

Sidma SA Steel

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Sidma SA Steel has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Sidma SA is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Armada Hflr and Sidma SA

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

The idea behind Armada Hflr Pr and Sidma SA Steel 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.

Check out your portfolio center.

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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.