Correlation Between Sabre Corpo and Toro Energy

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

By analyzing existing cross correlation between Sabre Corpo and Toro Energy Limited, you can compare the effects of market volatilities on Sabre Corpo and Toro Energy 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 Sabre Corpo with a short position of Toro Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sabre Corpo and Toro Energy.

Diversification Opportunities for Sabre Corpo and Toro Energy

0.01

Correlation Coefficient

Sabre Corpo  Toro Energy

Significant diversification

The 3 months correlation between Sabre and Toro is 0.01. Overlapping area represents the amount of risk that can be diversified away by holding Sabre Corpo and Toro Energy Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Toro Energy Limited and Sabre Corpo 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 Sabre Corpo are associated (or correlated) with Toro Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Toro Energy Limited has no effect on the direction of Sabre Corpo i.e., Sabre Corpo and Toro Energy go up and down completely randomly.

Pair Corralation between Sabre Corpo and Toro Energy

Given the investment horizon of 90 days Sabre Corpo is expected to under-perform the Toro Energy. But the stock apears to be less risky and, when comparing its historical volatility, Sabre Corpo is 8.59 times less risky than Toro Energy. The stock trades about -0.15 of its potential returns per unit of risk. The Toro Energy Limited is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest  17.00  in Toro Energy Limited on October 6, 2024 and sell it today you would earn a total of  1.00  from holding Toro Energy Limited or generate 5.88% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	85.0%
Values	Daily Returns

Sabre Corpo  vs.  Toro Energy Limited

Sabre Corpo

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Sabre Corpo are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak fundamental drivers, Sabre Corpo may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Toro Energy Limited

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Toro Energy Limited are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite nearly unfluctuating basic indicators, Toro Energy reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Sabre Corpo and Toro Energy

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

The idea behind Sabre Corpo and Toro Energy Limited 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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.