Correlation Between Canso Select and Sabio Holdings

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

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

Diversification Opportunities for Canso Select and Sabio Holdings

-0.19

Correlation Coefficient

Canso Select  Sabio Holdings

Good diversification

The 3 months correlation between Canso and Sabio is -0.19. Overlapping area represents the amount of risk that can be diversified away by holding Canso Select Opportunities and Sabio Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sabio Holdings and Canso Select 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 Canso Select Opportunities are associated (or correlated) with Sabio Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sabio Holdings has no effect on the direction of Canso Select i.e., Canso Select and Sabio Holdings go up and down completely randomly.

Pair Corralation between Canso Select and Sabio Holdings

Assuming the 90 days trading horizon Canso Select Opportunities is expected to under-perform the Sabio Holdings. In addition to that, Canso Select is 1.15 times more volatile than Sabio Holdings. It trades about -0.13 of its total potential returns per unit of risk. Sabio Holdings is currently generating about 0.12 per unit of volatility. If you would invest  50.00  in Sabio Holdings on October 5, 2024 and sell it today you would earn a total of  3.00  from holding Sabio Holdings or generate 6.0% return on investment over 90 days.

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

Canso Select Opportunities  vs.  Sabio Holdings

Canso Select Opportu

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Canso Select Opportunities are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite somewhat abnormal basic indicators, Canso Select sustained solid returns over the last few months and may actually be approaching a breakup point.

Sabio Holdings

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Sabio Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable forward indicators, Sabio Holdings is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Pair Trading with Canso Select and Sabio Holdings

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

The idea behind Canso Select Opportunities and Sabio Holdings 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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.