Correlation Between Caldas Gold and Sapiens International

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

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

Diversification Opportunities for Caldas Gold and Sapiens International

0.0

Correlation Coefficient

Caldas Gold  Sapiens International

Pay attention - limited upside

The 3 months correlation between Caldas and Sapiens is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Caldas Gold and Sapiens International in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sapiens International and Caldas Gold 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 Caldas Gold are associated (or correlated) with Sapiens International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sapiens International has no effect on the direction of Caldas Gold i.e., Caldas Gold and Sapiens International go up and down completely randomly.

Pair Corralation between Caldas Gold and Sapiens International

Assuming the 90 days horizon Caldas Gold is expected to generate 134.33 times more return on investment than Sapiens International. However, Caldas Gold is 134.33 times more volatile than Sapiens International. It trades about 0.25 of its potential returns per unit of risk. Sapiens International is currently generating about 0.03 per unit of risk. If you would invest  25.00  in Caldas Gold on October 23, 2024 and sell it today you would lose (7.00) from holding Caldas Gold or give up 28.0% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	4.86%
Values	Daily Returns

Caldas Gold  vs.  Sapiens International

Caldas Gold

Risk-Adjusted Performance

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Very Weak

Over the last 90 days Caldas Gold has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable fundamental indicators, Caldas Gold is not utilizing all of its potentials. The recent stock price disturbance, may contribute to mid-run losses for the stockholders.

Sapiens International

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Sapiens International has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of abnormal performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in February 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Pair Trading with Caldas Gold and Sapiens International

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

The idea behind Caldas Gold and Sapiens International 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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.