Correlation Between Sigma Labs and Flint Telecom

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

By analyzing existing cross correlation between Sigma Labs and Flint Telecom Group, you can compare the effects of market volatilities on Sigma Labs and Flint Telecom 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 Sigma Labs with a short position of Flint Telecom. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sigma Labs and Flint Telecom.

Diversification Opportunities for Sigma Labs and Flint Telecom

0.22

Correlation Coefficient

Sigma Labs  Flint Telecom

Modest diversification

The 3 months correlation between Sigma and Flint is 0.22. Overlapping area represents the amount of risk that can be diversified away by holding Sigma Labs and Flint Telecom Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Flint Telecom Group and Sigma Labs 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 Sigma Labs are associated (or correlated) with Flint Telecom. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Flint Telecom Group has no effect on the direction of Sigma Labs i.e., Sigma Labs and Flint Telecom go up and down completely randomly.

Pair Corralation between Sigma Labs and Flint Telecom

Given the investment horizon of 90 days Sigma Labs is expected to under-perform the Flint Telecom. But the stock apears to be less risky and, when comparing its historical volatility, Sigma Labs is 1.66 times less risky than Flint Telecom. The stock trades about -0.05 of its potential returns per unit of risk. The Flint Telecom Group is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest  550.00  in Flint Telecom Group on September 29, 2024 and sell it today you would lose (409.00) from holding Flint Telecom Group or give up 74.36% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	27.42%
Values	Daily Returns

Sigma Labs  vs.  Flint Telecom Group

Sigma Labs

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Sigma Labs has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fairly strong basic indicators, Sigma Labs is not utilizing all of its potentials. The latest stock price confusion, may contribute to short-horizon losses for the traders.

Flint Telecom Group

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Flint Telecom Group are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak basic indicators, Flint Telecom reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Sigma Labs and Flint Telecom

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

The idea behind Sigma Labs and Flint Telecom Group 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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.