Correlation Between Davis Commodities and Saia

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

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

Diversification Opportunities for Davis Commodities and Saia

-0.59

Correlation Coefficient

Davis Commodities  Saia

Excellent diversification

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

Pair Corralation between Davis Commodities and Saia

Given the investment horizon of 90 days Davis Commodities Limited is expected to generate 2.45 times more return on investment than Saia. However, Davis Commodities is 2.45 times more volatile than Saia Inc. It trades about 0.0 of its potential returns per unit of risk. Saia Inc is currently generating about -0.24 per unit of risk. If you would invest  108.00  in Davis Commodities Limited on October 11, 2024 and sell it today you would lose (5.00) from holding Davis Commodities Limited or give up 4.63% of portfolio value over 90 days.

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

Davis Commodities Limited  vs.  Saia Inc

Davis Commodities

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Davis Commodities Limited has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's fundamental indicators remain persistent and the latest mess on Wall Street may also be a sign of long-standing gains for the company institutional investors.

Saia Inc

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Saia Inc has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong forward indicators, Saia is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Davis Commodities and Saia

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

The idea behind Davis Commodities Limited and Saia Inc 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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.