Correlation Between Matrix and Sapiens International

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

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

Diversification Opportunities for Matrix and Sapiens International

-0.82

Correlation Coefficient

Matrix  Sapiens International

Pay attention - limited upside

The 3 months correlation between Matrix and Sapiens is -0.82. Overlapping area represents the amount of risk that can be diversified away by holding Matrix and Sapiens International in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sapiens International and Matrix 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 Matrix are associated (or correlated) with Sapiens International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sapiens International has no effect on the direction of Matrix i.e., Matrix and Sapiens International go up and down completely randomly.

Pair Corralation between Matrix and Sapiens International

Assuming the 90 days trading horizon Matrix is expected to generate 0.42 times more return on investment than Sapiens International. However, Matrix is 2.39 times less risky than Sapiens International. It trades about 0.22 of its potential returns per unit of risk. Sapiens International is currently generating about -0.12 per unit of risk. If you would invest  725,484  in Matrix on September 5, 2024 and sell it today you would earn a total of  128,316  from holding Matrix or generate 17.69% return on investment over 90 days.

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

Matrix  vs.  Sapiens International

Matrix

Risk-Adjusted Performance

17 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Matrix are ranked lower than 17 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Matrix sustained solid returns over the last few months and may actually be approaching a breakup point.

Sapiens International

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Sapiens International has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain somewhat strong which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with Matrix and Sapiens International

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

The idea behind Matrix and Sapiens International 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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..