Correlation Between Salee Colour and Getabec Public

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

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

Diversification Opportunities for Salee Colour and Getabec Public

0.71

Correlation Coefficient

Salee Colour  Getabec Public

Poor diversification

The 3 months correlation between Salee and Getabec is 0.71. Overlapping area represents the amount of risk that can be diversified away by holding Salee Colour Public and Getabec Public in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Getabec Public and Salee Colour 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 Salee Colour Public are associated (or correlated) with Getabec Public. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Getabec Public has no effect on the direction of Salee Colour i.e., Salee Colour and Getabec Public go up and down completely randomly.

Pair Corralation between Salee Colour and Getabec Public

Assuming the 90 days trading horizon Salee Colour is expected to generate 1.03 times less return on investment than Getabec Public. In addition to that, Salee Colour is 1.0 times more volatile than Getabec Public. It trades about 0.06 of its total potential returns per unit of risk. Getabec Public is currently generating about 0.06 per unit of volatility. If you would invest  63.00  in Getabec Public on September 4, 2024 and sell it today you would earn a total of  9.00  from holding Getabec Public or generate 14.29% return on investment over 90 days.

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

Salee Colour Public  vs.  Getabec Public

Salee Colour Public

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Salee Colour Public are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak fundamental drivers, Salee Colour sustained solid returns over the last few months and may actually be approaching a breakup point.

Getabec Public

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Getabec Public are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite quite persistent fundamental drivers, Getabec Public is not utilizing all of its potentials. The current stock price mess, may contribute to short-term losses for the institutional investors.

Pair Trading with Salee Colour and Getabec Public

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

The idea behind Salee Colour Public and Getabec 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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.