Correlation Between Microlise Group and Seraphim Space

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

By analyzing existing cross correlation between Microlise Group PLC and Seraphim Space Investment, you can compare the effects of market volatilities on Microlise Group and Seraphim Space 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 Microlise Group with a short position of Seraphim Space. Check out your portfolio center. Please also check ongoing floating volatility patterns of Microlise Group and Seraphim Space.

Diversification Opportunities for Microlise Group and Seraphim Space

-0.22

Correlation Coefficient

Microlise Group  Seraphim Space

Very good diversification

The 3 months correlation between Microlise and Seraphim is -0.22. Overlapping area represents the amount of risk that can be diversified away by holding Microlise Group PLC and Seraphim Space Investment in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Seraphim Space Investment and Microlise Group 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 Microlise Group PLC are associated (or correlated) with Seraphim Space. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Seraphim Space Investment has no effect on the direction of Microlise Group i.e., Microlise Group and Seraphim Space go up and down completely randomly.

Pair Corralation between Microlise Group and Seraphim Space

Assuming the 90 days trading horizon Microlise Group PLC is expected to generate 1.48 times more return on investment than Seraphim Space. However, Microlise Group is 1.48 times more volatile than Seraphim Space Investment. It trades about 0.04 of its potential returns per unit of risk. Seraphim Space Investment is currently generating about 0.05 per unit of risk. If you would invest  9,750  in Microlise Group PLC on December 26, 2024 and sell it today you would earn a total of  650.00  from holding Microlise Group PLC or generate 6.67% return on investment over 90 days.

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

Microlise Group PLC  vs.  Seraphim Space Investment

Microlise Group PLC

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Microlise Group PLC are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Microlise Group may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Seraphim Space Investment

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Seraphim Space Investment are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unsteady basic indicators, Seraphim Space may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Microlise Group and Seraphim Space

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

The idea behind Microlise Group PLC and Seraphim Space Investment 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 Portfolio File Import module to quickly import all of your third-party portfolios from your local drive in csv format.