Correlation Between Samsara and Valens

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

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

Diversification Opportunities for Samsara and Valens

-0.48

Correlation Coefficient

Samsara  Valens

Very good diversification

The 3 months correlation between Samsara and Valens is -0.48. Overlapping area represents the amount of risk that can be diversified away by holding Samsara and Valens in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Valens and Samsara 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 Samsara are associated (or correlated) with Valens. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Valens has no effect on the direction of Samsara i.e., Samsara and Valens go up and down completely randomly.

Pair Corralation between Samsara and Valens

Considering the 90-day investment horizon Samsara is expected to generate 44.22 times less return on investment than Valens. But when comparing it to its historical volatility, Samsara is 2.03 times less risky than Valens. It trades about 0.01 of its potential returns per unit of risk. Valens is currently generating about 0.2 of returns per unit of risk over similar time horizon. If you would invest  185.00  in Valens on October 23, 2024 and sell it today you would earn a total of  150.00  from holding Valens or generate 81.08% return on investment over 90 days.

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

Samsara  vs.  Valens

Samsara

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Samsara has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Samsara is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Valens

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Valens are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. In spite of very fragile essential indicators, Valens displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Samsara and Valens

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

The idea behind Samsara and Valens 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 Portfolio Anywhere module to track or share privately all of your investments from the convenience of any device.