Correlation Between Chemtrade Logistics and Saville Resources

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

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

Diversification Opportunities for Chemtrade Logistics and Saville Resources

0.61

Correlation Coefficient

Chemtrade Logistics  Saville Resources

Poor diversification

The 3 months correlation between Chemtrade and Saville is 0.61. Overlapping area represents the amount of risk that can be diversified away by holding Chemtrade Logistics Income and Saville Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Saville Resources and Chemtrade Logistics 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 Chemtrade Logistics Income are associated (or correlated) with Saville Resources. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Saville Resources has no effect on the direction of Chemtrade Logistics i.e., Chemtrade Logistics and Saville Resources go up and down completely randomly.

Pair Corralation between Chemtrade Logistics and Saville Resources

Assuming the 90 days trading horizon Chemtrade Logistics is expected to generate 8.46 times less return on investment than Saville Resources. But when comparing it to its historical volatility, Chemtrade Logistics Income is 6.51 times less risky than Saville Resources. It trades about 0.12 of its potential returns per unit of risk. Saville Resources is currently generating about 0.16 of returns per unit of risk over similar time horizon. If you would invest  7.50  in Saville Resources on September 24, 2024 and sell it today you would earn a total of  32.50  from holding Saville Resources or generate 433.33% return on investment over 90 days.

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

Chemtrade Logistics Income  vs.  Saville Resources

Chemtrade Logistics

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Chemtrade Logistics Income are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong technical and fundamental indicators, Chemtrade Logistics is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.

Saville Resources

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Saville Resources are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of fairly unfluctuating basic indicators, Saville Resources showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Chemtrade Logistics and Saville Resources

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

The idea behind Chemtrade Logistics Income and Saville Resources 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 Portfolio Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.