Correlation Between Carabao Group and Sappe Public

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

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

Diversification Opportunities for Carabao Group and Sappe Public

0.95

Correlation Coefficient

Carabao Group  Sappe Public

Almost no diversification

The 3 months correlation between Carabao and Sappe is 0.95. Overlapping area represents the amount of risk that can be diversified away by holding Carabao Group Public and Sappe Public in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sappe Public and Carabao Group 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 Carabao Group Public are associated (or correlated) with Sappe Public. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sappe Public has no effect on the direction of Carabao Group i.e., Carabao Group and Sappe Public go up and down completely randomly.

Pair Corralation between Carabao Group and Sappe Public

Assuming the 90 days trading horizon Carabao Group Public is expected to generate 0.73 times more return on investment than Sappe Public. However, Carabao Group Public is 1.36 times less risky than Sappe Public. It trades about -0.17 of its potential returns per unit of risk. Sappe Public is currently generating about -0.33 per unit of risk. If you would invest  7,767  in Carabao Group Public on December 30, 2024 and sell it today you would lose (1,792) from holding Carabao Group Public or give up 23.07% of portfolio value over 90 days.

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

Carabao Group Public  vs.  Sappe Public

Carabao Group Public

Risk-Adjusted Performance

Very Weak

Over the last 90 days Carabao Group Public has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's technical and fundamental indicators remain quite persistent which may send shares a bit higher in April 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Sappe Public

Risk-Adjusted Performance

Very Weak

Over the last 90 days Sappe Public has generated negative risk-adjusted returns adding no value to investors with long positions. Despite conflicting performance in the last few months, the Stock's fundamental drivers remain somewhat strong which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with Carabao Group and Sappe Public

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

The idea behind Carabao Group Public and Sappe Public 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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.