Correlation Between Elastron and Sidma SA

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

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

Diversification Opportunities for Elastron and Sidma SA

-0.07

Correlation Coefficient

Elastron  Sidma SA

Good diversification

The 3 months correlation between Elastron and Sidma is -0.07. Overlapping area represents the amount of risk that can be diversified away by holding Elastron SA and Sidma SA Steel in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sidma SA Steel and Elastron 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 Elastron SA are associated (or correlated) with Sidma SA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sidma SA Steel has no effect on the direction of Elastron i.e., Elastron and Sidma SA go up and down completely randomly.

Pair Corralation between Elastron and Sidma SA

Assuming the 90 days trading horizon Elastron SA is expected to generate 1.0 times more return on investment than Sidma SA. However, Elastron is 1.0 times more volatile than Sidma SA Steel. It trades about -0.02 of its potential returns per unit of risk. Sidma SA Steel is currently generating about -0.07 per unit of risk. If you would invest  261.00  in Elastron SA on December 2, 2024 and sell it today you would lose (29.00) from holding Elastron SA or give up 11.11% of portfolio value over 90 days.

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

Elastron SA   vs.  Sidma SA Steel

Elastron SA

Risk-Adjusted Performance

Good

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

Sidma SA Steel

Risk-Adjusted Performance

Very Weak

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

Pair Trading with Elastron and Sidma SA

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

The idea behind Elastron SA and Sidma SA Steel 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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.