Correlation Between Sachem Capital and Cherry Hill

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

By analyzing existing cross correlation between Sachem Capital Corp and Cherry Hill Mortgage, you can compare the effects of market volatilities on Sachem Capital and Cherry Hill 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 Sachem Capital with a short position of Cherry Hill. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sachem Capital and Cherry Hill.

Diversification Opportunities for Sachem Capital and Cherry Hill

0.47

Correlation Coefficient

Sachem Capital  Cherry Hill

Very weak diversification

The 3 months correlation between Sachem and Cherry is 0.47. Overlapping area represents the amount of risk that can be diversified away by holding Sachem Capital Corp and Cherry Hill Mortgage in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cherry Hill Mortgage and Sachem Capital 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 Sachem Capital Corp are associated (or correlated) with Cherry Hill. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cherry Hill Mortgage has no effect on the direction of Sachem Capital i.e., Sachem Capital and Cherry Hill go up and down completely randomly.

Pair Corralation between Sachem Capital and Cherry Hill

Assuming the 90 days trading horizon Sachem Capital Corp is expected to generate 4.25 times more return on investment than Cherry Hill. However, Sachem Capital is 4.25 times more volatile than Cherry Hill Mortgage. It trades about 0.04 of its potential returns per unit of risk. Cherry Hill Mortgage is currently generating about 0.02 per unit of risk. If you would invest  1,549  in Sachem Capital Corp on December 31, 2024 and sell it today you would earn a total of  63.00  from holding Sachem Capital Corp or generate 4.07% return on investment over 90 days.

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

Sachem Capital Corp  vs.  Cherry Hill Mortgage

Sachem Capital Corp

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Sachem Capital Corp are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Sachem Capital may actually be approaching a critical reversion point that can send shares even higher in May 2025.

Cherry Hill Mortgage

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Cherry Hill Mortgage are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, Cherry Hill is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Sachem Capital and Cherry Hill

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

The idea behind Sachem Capital Corp and Cherry Hill Mortgage 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 Portfolio Center module to all portfolio management and optimization tools to improve performance of your portfolios.