Correlation Between CirChem AB and Senzime AB

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

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

Diversification Opportunities for CirChem AB and Senzime AB

-0.59

Correlation Coefficient

CirChem AB  Senzime AB

Excellent diversification

The 3 months correlation between CirChem and Senzime is -0.59. Overlapping area represents the amount of risk that can be diversified away by holding CirChem AB and Senzime AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Senzime AB and CirChem AB 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 CirChem AB are associated (or correlated) with Senzime AB. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Senzime AB has no effect on the direction of CirChem AB i.e., CirChem AB and Senzime AB go up and down completely randomly.

Pair Corralation between CirChem AB and Senzime AB

Assuming the 90 days trading horizon CirChem AB is expected to generate 0.97 times more return on investment than Senzime AB. However, CirChem AB is 1.03 times less risky than Senzime AB. It trades about 0.0 of its potential returns per unit of risk. Senzime AB is currently generating about -0.01 per unit of risk. If you would invest  554.00  in CirChem AB on September 23, 2024 and sell it today you would lose (167.00) from holding CirChem AB or give up 30.14% of portfolio value over 90 days.

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

CirChem AB  vs.  Senzime AB

CirChem AB

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in CirChem AB are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. Despite somewhat uncertain basic indicators, CirChem AB sustained solid returns over the last few months and may actually be approaching a breakup point.

Senzime AB

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with CirChem AB and Senzime AB

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

The idea behind CirChem AB and Senzime AB 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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.