Correlation Between SPORT LISBOA and SIMS

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

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

Diversification Opportunities for SPORT LISBOA and SIMS

0.0

Correlation Coefficient

SPORT LISBOA  SIMS

Pay attention - limited upside

The 3 months correlation between SPORT and SIMS is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding SPORT LISBOA E and SIMS LTD ADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SIMS LTD ADR and SPORT LISBOA 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 SPORT LISBOA E are associated (or correlated) with SIMS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SIMS LTD ADR has no effect on the direction of SPORT LISBOA i.e., SPORT LISBOA and SIMS go up and down completely randomly.

Pair Corralation between SPORT LISBOA and SIMS

If you would invest (100.00) in SIMS LTD ADR on October 23, 2024 and sell it today you would earn a total of  100.00  from holding SIMS LTD ADR or generate -100.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	0.0%
Values	Daily Returns

SPORT LISBOA E  vs.  SIMS LTD ADR

SPORT LISBOA E

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in SPORT LISBOA E are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, SPORT LISBOA is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

SIMS LTD ADR

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days SIMS LTD ADR has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable primary indicators, SIMS is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with SPORT LISBOA and SIMS

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

The idea behind SPORT LISBOA E and SIMS LTD ADR 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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.