Correlation Between Project Planning and SGF Capital

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

By analyzing existing cross correlation between Project Planning Service and SGF Capital Public, you can compare the effects of market volatilities on Project Planning and SGF Capital 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 Project Planning with a short position of SGF Capital. Check out your portfolio center. Please also check ongoing floating volatility patterns of Project Planning and SGF Capital.

Diversification Opportunities for Project Planning and SGF Capital

0.87

Correlation Coefficient

Project Planning  SGF Capital

Very poor diversification

The 3 months correlation between Project and SGF is 0.87. Overlapping area represents the amount of risk that can be diversified away by holding Project Planning Service and SGF Capital Public in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SGF Capital Public and Project Planning 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 Project Planning Service are associated (or correlated) with SGF Capital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SGF Capital Public has no effect on the direction of Project Planning i.e., Project Planning and SGF Capital go up and down completely randomly.

Pair Corralation between Project Planning and SGF Capital

Assuming the 90 days trading horizon Project Planning Service is expected to generate 1.0 times more return on investment than SGF Capital. However, Project Planning is 1.0 times more volatile than SGF Capital Public. It trades about 0.05 of its potential returns per unit of risk. SGF Capital Public is currently generating about 0.05 per unit of risk. If you would invest  39.00  in Project Planning Service on September 27, 2024 and sell it today you would lose (18.00) from holding Project Planning Service or give up 46.15% of portfolio value over 90 days.

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

Project Planning Service  vs.  SGF Capital Public

Project Planning Service

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Project Planning Service 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 quite persistent which may send shares a bit higher in January 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

SGF Capital Public

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days SGF Capital Public 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 technical and fundamental indicators remain quite persistent which may send shares a bit higher in January 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Pair Trading with Project Planning and SGF Capital

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

The idea behind Project Planning Service and SGF Capital Public 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.

Check out your portfolio center.

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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.