Correlation Between Saipem SpA and Caspian Services

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

By analyzing existing cross correlation between Saipem SpA and Caspian Services, you can compare the effects of market volatilities on Saipem SpA and Caspian Services 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 Saipem SpA with a short position of Caspian Services. Check out your portfolio center. Please also check ongoing floating volatility patterns of Saipem SpA and Caspian Services.

Diversification Opportunities for Saipem SpA and Caspian Services

0.0

Correlation Coefficient

Saipem SpA  Caspian Services

Pay attention - limited upside

The 3 months correlation between Saipem and Caspian is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Saipem SpA and Caspian Services in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Caspian Services and Saipem SpA 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 Saipem SpA are associated (or correlated) with Caspian Services. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Caspian Services has no effect on the direction of Saipem SpA i.e., Saipem SpA and Caspian Services go up and down completely randomly.

Pair Corralation between Saipem SpA and Caspian Services

Assuming the 90 days horizon Saipem SpA is expected to generate 5.28 times less return on investment than Caspian Services. But when comparing it to its historical volatility, Saipem SpA is 4.65 times less risky than Caspian Services. It trades about 0.01 of its potential returns per unit of risk. Caspian Services is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest  1.00  in Caspian Services on December 10, 2024 and sell it today you would lose (0.60) from holding Caspian Services or give up 60.0% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	79.69%
Values	Daily Returns

Saipem SpA  vs.  Caspian Services

Saipem SpA

Risk-Adjusted Performance

Very Weak

Over the last 90 days Saipem SpA has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's primary indicators remain nearly stable which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Caspian Services

Risk-Adjusted Performance

Very Weak

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

Pair Trading with Saipem SpA and Caspian Services

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

The idea behind Saipem SpA and Caspian Services 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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.