Correlation Between Thrace Plastics and Sidma SA

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

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

Diversification Opportunities for Thrace Plastics and Sidma SA

-0.04

Correlation Coefficient

Thrace Plastics  Sidma SA

Good diversification

The 3 months correlation between Thrace and Sidma is -0.04. Overlapping area represents the amount of risk that can be diversified away by holding Thrace Plastics Holding 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 Thrace Plastics 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 Thrace Plastics Holding 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 Thrace Plastics i.e., Thrace Plastics and Sidma SA go up and down completely randomly.

Pair Corralation between Thrace Plastics and Sidma SA

Assuming the 90 days trading horizon Thrace Plastics Holding is expected to generate 0.73 times more return on investment than Sidma SA. However, Thrace Plastics Holding is 1.38 times less risky than Sidma SA. It trades about 0.02 of its potential returns per unit of risk. Sidma SA Steel is currently generating about -0.04 per unit of risk. If you would invest  391.00  in Thrace Plastics Holding on September 5, 2024 and sell it today you would earn a total of  5.00  from holding Thrace Plastics Holding or generate 1.28% return on investment over 90 days.

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

Thrace Plastics Holding  vs.  Sidma SA Steel

Thrace Plastics Holding

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Thrace Plastics Holding are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, Thrace Plastics is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Sidma SA Steel

Risk-Adjusted Performance

0 of 100

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 current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Thrace Plastics and Sidma SA

The main advantage of trading using opposite Thrace Plastics and Sidma SA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Thrace Plastics 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 Thrace Plastics Holding 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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.