Correlation Between Sachem Capital and Telephone

Can any of the company-specific risk be diversified away by investing in both Sachem Capital and Telephone 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 Telephone 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 Telephone and Data, you can compare the effects of market volatilities on Sachem Capital and Telephone 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 Telephone. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sachem Capital and Telephone.

Diversification Opportunities for Sachem Capital and Telephone

0.31

Correlation Coefficient

Sachem Capital  Telephone

Weak diversification

The 3 months correlation between Sachem and Telephone is 0.31. Overlapping area represents the amount of risk that can be diversified away by holding Sachem Capital Corp and Telephone and Data in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Telephone and Data 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 Telephone. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Telephone and Data has no effect on the direction of Sachem Capital i.e., Sachem Capital and Telephone go up and down completely randomly.

Pair Corralation between Sachem Capital and Telephone

Assuming the 90 days trading horizon Sachem Capital Corp is expected to under-perform the Telephone. In addition to that, Sachem Capital is 4.81 times more volatile than Telephone and Data. It trades about -0.09 of its total potential returns per unit of risk. Telephone and Data is currently generating about -0.22 per unit of volatility. If you would invest  1,935  in Telephone and Data on November 19, 2024 and sell it today you would lose (80.00) from holding Telephone and Data or give up 4.13% of portfolio value over 90 days.

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

Sachem Capital Corp  vs.  Telephone and Data

Sachem Capital Corp

Risk-Adjusted Performance

Very Weak

Over the last 90 days Sachem Capital Corp has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Preferred Stock's basic indicators remain somewhat strong which may send shares a bit higher in March 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Telephone and Data

Risk-Adjusted Performance

Very Weak

Over the last 90 days Telephone and Data has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable basic indicators, Telephone is not utilizing all of its potentials. The newest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Pair Trading with Sachem Capital and Telephone

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

The idea behind Sachem Capital Corp and Telephone and Data 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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.