Correlation Between Sa Us and Sa Emerging

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

By analyzing existing cross correlation between Sa Mkt Fd and Sa Emerging Markets, you can compare the effects of market volatilities on Sa Us and Sa Emerging 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 Sa Us with a short position of Sa Emerging. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sa Us and Sa Emerging.

Diversification Opportunities for Sa Us and Sa Emerging

-0.31

Correlation Coefficient

Sa Us  Sa Emerging

Very good diversification

The 3 months correlation between SAMKX and SAEMX is -0.31. Overlapping area represents the amount of risk that can be diversified away by holding Sa Mkt Fd and Sa Emerging Markets in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sa Emerging Markets and Sa Us 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 Sa Mkt Fd are associated (or correlated) with Sa Emerging. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sa Emerging Markets has no effect on the direction of Sa Us i.e., Sa Us and Sa Emerging go up and down completely randomly.

Pair Corralation between Sa Us and Sa Emerging

Assuming the 90 days horizon Sa Mkt Fd is expected to generate 1.07 times more return on investment than Sa Emerging. However, Sa Us is 1.07 times more volatile than Sa Emerging Markets. It trades about -0.11 of its potential returns per unit of risk. Sa Emerging Markets is currently generating about -0.44 per unit of risk. If you would invest  3,753  in Sa Mkt Fd on October 9, 2024 and sell it today you would lose (89.00) from holding Sa Mkt Fd or give up 2.37% of portfolio value over 90 days.

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

Sa Mkt Fd  vs.  Sa Emerging Markets

Sa Mkt Fd

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Sa Mkt Fd are ranked lower than 3 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong forward-looking signals, Sa Us is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Sa Emerging Markets

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Sa Emerging Markets has generated negative risk-adjusted returns adding no value to fund investors. In spite of latest weak performance, the Fund's primary indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the fund investors.

Pair Trading with Sa Us and Sa Emerging

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

The idea behind Sa Mkt Fd and Sa Emerging Markets 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.