Correlation Between Sao Ta and Riverway Management

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

By analyzing existing cross correlation between Sao Ta Foods and Riverway Management JSC, you can compare the effects of market volatilities on Sao Ta and Riverway Management 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 Sao Ta with a short position of Riverway Management. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sao Ta and Riverway Management.

Diversification Opportunities for Sao Ta and Riverway Management

-0.67

Correlation Coefficient

Sao Ta  Riverway Management

Excellent diversification

The 3 months correlation between Sao and Riverway is -0.67. Overlapping area represents the amount of risk that can be diversified away by holding Sao Ta Foods and Riverway Management JSC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Riverway Management JSC and Sao Ta 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 Sao Ta Foods are associated (or correlated) with Riverway Management. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Riverway Management JSC has no effect on the direction of Sao Ta i.e., Sao Ta and Riverway Management go up and down completely randomly.

Pair Corralation between Sao Ta and Riverway Management

Assuming the 90 days trading horizon Sao Ta Foods is expected to under-perform the Riverway Management. But the stock apears to be less risky and, when comparing its historical volatility, Sao Ta Foods is 3.68 times less risky than Riverway Management. The stock trades about -0.21 of its potential returns per unit of risk. The Riverway Management JSC is currently generating about -0.03 of returns per unit of risk over similar time horizon. If you would invest  510,000  in Riverway Management JSC on October 11, 2024 and sell it today you would lose (10,000) from holding Riverway Management JSC or give up 1.96% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	72.73%
Values	Daily Returns

Sao Ta Foods  vs.  Riverway Management JSC

Sao Ta Foods

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Sao Ta Foods has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy fundamental indicators, Sao Ta is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Riverway Management JSC

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Riverway Management JSC has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unfluctuating performance in the last few months, the Stock's basic indicators remain very healthy which may send shares a bit higher in February 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Pair Trading with Sao Ta and Riverway Management

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

The idea behind Sao Ta Foods and Riverway Management JSC 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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.