Correlation Between SERI INDUSTRIAL and SPORT LISBOA

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

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

Diversification Opportunities for SERI INDUSTRIAL and SPORT LISBOA

-0.05

Correlation Coefficient

SERI INDUSTRIAL  SPORT LISBOA

Good diversification

The 3 months correlation between SERI and SPORT is -0.05. Overlapping area represents the amount of risk that can be diversified away by holding SERI INDUSTRIAL EO and SPORT LISBOA E in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SPORT LISBOA E and SERI INDUSTRIAL 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 SERI INDUSTRIAL EO are associated (or correlated) with SPORT LISBOA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SPORT LISBOA E has no effect on the direction of SERI INDUSTRIAL i.e., SERI INDUSTRIAL and SPORT LISBOA go up and down completely randomly.

Pair Corralation between SERI INDUSTRIAL and SPORT LISBOA

Assuming the 90 days trading horizon SERI INDUSTRIAL EO is expected to under-perform the SPORT LISBOA. In addition to that, SERI INDUSTRIAL is 1.07 times more volatile than SPORT LISBOA E. It trades about -0.14 of its total potential returns per unit of risk. SPORT LISBOA E is currently generating about 0.04 per unit of volatility. If you would invest  306.00  in SPORT LISBOA E on December 19, 2024 and sell it today you would earn a total of  12.00  from holding SPORT LISBOA E or generate 3.92% return on investment over 90 days.

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

SERI INDUSTRIAL EO  vs.  SPORT LISBOA E

SERI INDUSTRIAL EO

Risk-Adjusted Performance

Very Weak

Over the last 90 days SERI INDUSTRIAL EO has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fragile performance in the last few months, the Stock's technical indicators remain nearly stable which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

SPORT LISBOA E

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in SPORT LISBOA E are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite nearly uncertain basic indicators, SPORT LISBOA may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with SERI INDUSTRIAL and SPORT LISBOA

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

The idea behind SERI INDUSTRIAL EO and SPORT LISBOA E 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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.