Correlation Between Basic Fit and Sif Holding

Can any of the company-specific risk be diversified away by investing in both Basic Fit and Sif Holding 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 Basic Fit and Sif Holding into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Basic Fit NV and Sif Holding NV, you can compare the effects of market volatilities on Basic Fit and Sif Holding 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 Basic Fit with a short position of Sif Holding. Check out your portfolio center. Please also check ongoing floating volatility patterns of Basic Fit and Sif Holding.

Diversification Opportunities for Basic Fit and Sif Holding

0.77

Correlation Coefficient

Basic Fit  Sif Holding

Poor diversification

The 3 months correlation between Basic and Sif is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding Basic Fit NV and Sif Holding NV in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sif Holding NV and Basic Fit 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 Basic Fit NV are associated (or correlated) with Sif Holding. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sif Holding NV has no effect on the direction of Basic Fit i.e., Basic Fit and Sif Holding go up and down completely randomly.

Pair Corralation between Basic Fit and Sif Holding

Assuming the 90 days trading horizon Basic Fit is expected to generate 18.66 times less return on investment than Sif Holding. In addition to that, Basic Fit is 1.11 times more volatile than Sif Holding NV. It trades about 0.0 of its total potential returns per unit of risk. Sif Holding NV is currently generating about 0.09 per unit of volatility. If you would invest  1,018  in Sif Holding NV on September 1, 2024 and sell it today you would earn a total of  226.00  from holding Sif Holding NV or generate 22.2% return on investment over 90 days.

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

Basic Fit NV  vs.  Sif Holding NV

Basic Fit NV

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Basic Fit NV has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Basic Fit is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

Sif Holding NV

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Sif Holding NV are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak basic indicators, Sif Holding may actually be approaching a critical reversion point that can send shares even higher in December 2024.

Pair Trading with Basic Fit and Sif Holding

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

The idea behind Basic Fit NV and Sif Holding NV 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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.