Correlation Between NOS SGPS and Semapa

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

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

Diversification Opportunities for NOS SGPS and Semapa

0.81

Correlation Coefficient

NOS SGPS  Semapa

Very poor diversification

The 3 months correlation between NOS and Semapa is 0.81. Overlapping area represents the amount of risk that can be diversified away by holding NOS SGPS SA and Semapa in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Semapa and NOS SGPS 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 NOS SGPS SA are associated (or correlated) with Semapa. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Semapa has no effect on the direction of NOS SGPS i.e., NOS SGPS and Semapa go up and down completely randomly.

Pair Corralation between NOS SGPS and Semapa

Assuming the 90 days trading horizon NOS SGPS is expected to generate 3.3 times less return on investment than Semapa. But when comparing it to its historical volatility, NOS SGPS SA is 1.09 times less risky than Semapa. It trades about 0.01 of its potential returns per unit of risk. Semapa is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest  1,114  in Semapa on September 16, 2024 and sell it today you would earn a total of  258.00  from holding Semapa or generate 23.16% return on investment over 90 days.

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

NOS SGPS SA  vs.  Semapa

NOS SGPS SA

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days NOS SGPS SA has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest uncertain performance, the Stock's basic indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Semapa

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with NOS SGPS and Semapa

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

The idea behind NOS SGPS SA and Semapa 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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..