Correlation Between SIEM OFFSHORE and CARSALESCOM

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

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

Diversification Opportunities for SIEM OFFSHORE and CARSALESCOM

0.6

Correlation Coefficient

SIEM OFFSHORE  CARSALESCOM

Poor diversification

The 3 months correlation between SIEM and CARSALESCOM is 0.6. Overlapping area represents the amount of risk that can be diversified away by holding SIEM OFFSHORE NEW and CARSALESCOM in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CARSALESCOM and SIEM OFFSHORE 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 SIEM OFFSHORE NEW are associated (or correlated) with CARSALESCOM. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CARSALESCOM has no effect on the direction of SIEM OFFSHORE i.e., SIEM OFFSHORE and CARSALESCOM go up and down completely randomly.

Pair Corralation between SIEM OFFSHORE and CARSALESCOM

Assuming the 90 days trading horizon SIEM OFFSHORE NEW is expected to generate 1.6 times more return on investment than CARSALESCOM. However, SIEM OFFSHORE is 1.6 times more volatile than CARSALESCOM. It trades about -0.14 of its potential returns per unit of risk. CARSALESCOM is currently generating about -0.44 per unit of risk. If you would invest  228.00  in SIEM OFFSHORE NEW on October 6, 2024 and sell it today you would lose (14.00) from holding SIEM OFFSHORE NEW or give up 6.14% of portfolio value over 90 days.

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

SIEM OFFSHORE NEW  vs.  CARSALESCOM

SIEM OFFSHORE NEW

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days SIEM OFFSHORE NEW 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 February 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

CARSALESCOM

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days CARSALESCOM has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound basic indicators, CARSALESCOM is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with SIEM OFFSHORE and CARSALESCOM

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

The idea behind SIEM OFFSHORE NEW and CARSALESCOM 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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.