Correlation Between Brimstone Investment and Sygnia

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

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

Diversification Opportunities for Brimstone Investment and Sygnia

0.71

Correlation Coefficient

Brimstone Investment  Sygnia

Poor diversification

The 3 months correlation between Brimstone and Sygnia is 0.71. Overlapping area represents the amount of risk that can be diversified away by holding Brimstone Investment and Sygnia in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sygnia and Brimstone Investment 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 Brimstone Investment are associated (or correlated) with Sygnia. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sygnia has no effect on the direction of Brimstone Investment i.e., Brimstone Investment and Sygnia go up and down completely randomly.

Pair Corralation between Brimstone Investment and Sygnia

Assuming the 90 days trading horizon Brimstone Investment is expected to under-perform the Sygnia. In addition to that, Brimstone Investment is 2.21 times more volatile than Sygnia. It trades about -0.05 of its total potential returns per unit of risk. Sygnia is currently generating about -0.07 per unit of volatility. If you would invest  240,100  in Sygnia on October 26, 2024 and sell it today you would lose (17,700) from holding Sygnia or give up 7.37% of portfolio value over 90 days.

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

Brimstone Investment  vs.  Sygnia

Brimstone Investment

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Brimstone Investment has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unsteady performance, the Stock's technical and fundamental indicators remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for the firm shareholders.

Sygnia

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Sygnia has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unsteady performance, the Stock's technical and fundamental indicators remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for the firm shareholders.

Pair Trading with Brimstone Investment and Sygnia

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

The idea behind Brimstone Investment and Sygnia 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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.