Correlation Between Salzer Electronics and Automotive Stampings

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

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

Diversification Opportunities for Salzer Electronics and Automotive Stampings

0.95

Correlation Coefficient

Salzer Electronics  Automotive Stampings

Almost no diversification

The 3 months correlation between Salzer and Automotive is 0.95. Overlapping area represents the amount of risk that can be diversified away by holding Salzer Electronics Limited and Automotive Stampings and in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Automotive Stampings and and Salzer Electronics 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 Salzer Electronics Limited are associated (or correlated) with Automotive Stampings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Automotive Stampings and has no effect on the direction of Salzer Electronics i.e., Salzer Electronics and Automotive Stampings go up and down completely randomly.

Pair Corralation between Salzer Electronics and Automotive Stampings

Assuming the 90 days trading horizon Salzer Electronics Limited is expected to generate 1.18 times more return on investment than Automotive Stampings. However, Salzer Electronics is 1.18 times more volatile than Automotive Stampings and. It trades about -0.07 of its potential returns per unit of risk. Automotive Stampings and is currently generating about -0.11 per unit of risk. If you would invest  138,560  in Salzer Electronics Limited on December 28, 2024 and sell it today you would lose (30,070) from holding Salzer Electronics Limited or give up 21.7% of portfolio value over 90 days.

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

Salzer Electronics Limited  vs.  Automotive Stampings and

Salzer Electronics

Risk-Adjusted Performance

Very Weak

Over the last 90 days Salzer Electronics Limited has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's essential indicators remain rather sound which may send shares a bit higher in April 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Automotive Stampings and

Risk-Adjusted Performance

Very Weak

Over the last 90 days Automotive Stampings and has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in April 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Pair Trading with Salzer Electronics and Automotive Stampings

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

The idea behind Salzer Electronics Limited and Automotive Stampings and 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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.