Correlation Between EL D and Sidma SA

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

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

Diversification Opportunities for EL D and Sidma SA

0.69

Correlation Coefficient

EL D  Sidma SA

Poor diversification

The 3 months correlation between MOYZK and Sidma is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding EL D Mouzakis and Sidma SA Steel in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sidma SA Steel and EL D 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 EL D Mouzakis are associated (or correlated) with Sidma SA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sidma SA Steel has no effect on the direction of EL D i.e., EL D and Sidma SA go up and down completely randomly.

Pair Corralation between EL D and Sidma SA

Assuming the 90 days trading horizon EL D Mouzakis is expected to under-perform the Sidma SA. In addition to that, EL D is 1.44 times more volatile than Sidma SA Steel. It trades about -0.05 of its total potential returns per unit of risk. Sidma SA Steel is currently generating about -0.04 per unit of volatility. If you would invest  158.00  in Sidma SA Steel on December 30, 2024 and sell it today you would lose (8.00) from holding Sidma SA Steel or give up 5.06% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	98.39%
Values	Daily Returns

EL D Mouzakis  vs.  Sidma SA Steel

EL D Mouzakis

Risk-Adjusted Performance

Very Weak

Over the last 90 days EL D Mouzakis has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest uncertain performance, the Stock's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Sidma SA Steel

Risk-Adjusted Performance

Very Weak

Over the last 90 days Sidma SA Steel has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Sidma SA is not utilizing all of its potentials. The newest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with EL D and Sidma SA

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

The idea behind EL D Mouzakis and Sidma SA Steel 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.