Correlation Between Flexible Solutions and Saia

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

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

Diversification Opportunities for Flexible Solutions and Saia

0.69

Correlation Coefficient

Flexible Solutions  Saia

Poor diversification

The 3 months correlation between Flexible and Saia is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding Flexible Solutions Internation and Saia Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Saia Inc and Flexible Solutions 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 Flexible Solutions International 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 Flexible Solutions i.e., Flexible Solutions and Saia go up and down completely randomly.

Pair Corralation between Flexible Solutions and Saia

Considering the 90-day investment horizon Flexible Solutions is expected to generate 1.58 times less return on investment than Saia. In addition to that, Flexible Solutions is 1.15 times more volatile than Saia Inc. It trades about 0.03 of its total potential returns per unit of risk. Saia Inc is currently generating about 0.05 per unit of volatility. If you would invest  29,367  in Saia Inc on September 27, 2024 and sell it today you would earn a total of  18,250  from holding Saia Inc or generate 62.14% return on investment over 90 days.

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

Flexible Solutions Internation  vs.  Saia Inc

Flexible Solutions

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Flexible Solutions International has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fairly strong basic indicators, Flexible Solutions is not utilizing all of its potentials. The latest stock price confusion, may contribute to short-horizon losses for the traders.

Saia Inc

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Saia Inc are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite somewhat unfluctuating forward indicators, Saia may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Flexible Solutions and Saia

The main advantage of trading using opposite Flexible Solutions and Saia positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Flexible Solutions 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 Flexible Solutions International 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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.