Correlation Between Lendlease and SIKA AG

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

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

Diversification Opportunities for Lendlease and SIKA AG

0.38

Correlation Coefficient

Lendlease  SIKA AG

Weak diversification

The 3 months correlation between Lendlease and SIKA is 0.38. Overlapping area represents the amount of risk that can be diversified away by holding Lendlease Group and SIKA AG UNSPADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SIKA AG UNSPADR and Lendlease 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 Lendlease Group are associated (or correlated) with SIKA AG. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SIKA AG UNSPADR has no effect on the direction of Lendlease i.e., Lendlease and SIKA AG go up and down completely randomly.

Pair Corralation between Lendlease and SIKA AG

Assuming the 90 days trading horizon Lendlease Group is expected to generate 1.09 times more return on investment than SIKA AG. However, Lendlease is 1.09 times more volatile than SIKA AG UNSPADR. It trades about -0.03 of its potential returns per unit of risk. SIKA AG UNSPADR is currently generating about -0.14 per unit of risk. If you would invest  424.00  in Lendlease Group on September 12, 2024 and sell it today you would lose (15.00) from holding Lendlease Group or give up 3.54% of portfolio value over 90 days.

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

Lendlease Group  vs.  SIKA AG UNSPADR

Lendlease Group

Risk-Adjusted Performance

0 of 100

Very Weak

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

SIKA AG UNSPADR

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days SIKA AG UNSPADR has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest fragile performance, the Stock's forward-looking signals remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Pair Trading with Lendlease and SIKA AG

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

The idea behind Lendlease Group and SIKA AG UNSPADR 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.