Correlation Between Chrysalis Investments and Sage Group

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

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

Diversification Opportunities for Chrysalis Investments and Sage Group

0.41

Correlation Coefficient

Chrysalis Investments  Sage Group

Very weak diversification

The 3 months correlation between Chrysalis and Sage is 0.41. Overlapping area represents the amount of risk that can be diversified away by holding Chrysalis Investments and Sage Group PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sage Group PLC and Chrysalis Investments 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 Chrysalis Investments are associated (or correlated) with Sage Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sage Group PLC has no effect on the direction of Chrysalis Investments i.e., Chrysalis Investments and Sage Group go up and down completely randomly.

Pair Corralation between Chrysalis Investments and Sage Group

Assuming the 90 days trading horizon Chrysalis Investments is expected to under-perform the Sage Group. In addition to that, Chrysalis Investments is 1.74 times more volatile than Sage Group PLC. It trades about -0.12 of its total potential returns per unit of risk. Sage Group PLC is currently generating about -0.12 per unit of volatility. If you would invest  127,915  in Sage Group PLC on December 24, 2024 and sell it today you would lose (9,015) from holding Sage Group PLC or give up 7.05% of portfolio value over 90 days.

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

Chrysalis Investments  vs.  Sage Group PLC

Chrysalis Investments

Risk-Adjusted Performance

Very Weak

Over the last 90 days Chrysalis Investments has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unsteady performance, the Stock's basic indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Sage Group PLC

Risk-Adjusted Performance

Very Weak

Over the last 90 days Sage Group PLC 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 Chrysalis Investments and Sage Group

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

The idea behind Chrysalis Investments and Sage Group PLC 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 CEOs Directory module to screen CEOs from public companies around the world.