Correlation Between Sabio Holdings and Inventus Mining

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

By analyzing existing cross correlation between Sabio Holdings and Inventus Mining Corp, you can compare the effects of market volatilities on Sabio Holdings and Inventus Mining 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 Sabio Holdings with a short position of Inventus Mining. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sabio Holdings and Inventus Mining.

Diversification Opportunities for Sabio Holdings and Inventus Mining

-0.23

Correlation Coefficient

Sabio Holdings  Inventus Mining

Very good diversification

The 3 months correlation between Sabio and Inventus is -0.23. Overlapping area represents the amount of risk that can be diversified away by holding Sabio Holdings and Inventus Mining Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Inventus Mining Corp and Sabio Holdings 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 Sabio Holdings are associated (or correlated) with Inventus Mining. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Inventus Mining Corp has no effect on the direction of Sabio Holdings i.e., Sabio Holdings and Inventus Mining go up and down completely randomly.

Pair Corralation between Sabio Holdings and Inventus Mining

Assuming the 90 days trading horizon Sabio Holdings is expected to generate 39.36 times less return on investment than Inventus Mining. But when comparing it to its historical volatility, Sabio Holdings is 3.11 times less risky than Inventus Mining. It trades about 0.01 of its potential returns per unit of risk. Inventus Mining Corp is currently generating about 0.17 of returns per unit of risk over similar time horizon. If you would invest  7.00  in Inventus Mining Corp on September 22, 2024 and sell it today you would earn a total of  2.00  from holding Inventus Mining Corp or generate 28.57% return on investment over 90 days.

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

Sabio Holdings  vs.  Inventus Mining Corp

Sabio Holdings

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Sabio Holdings are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal forward indicators, Sabio Holdings showed solid returns over the last few months and may actually be approaching a breakup point.

Inventus Mining Corp

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Inventus Mining Corp are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Inventus Mining showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Sabio Holdings and Inventus Mining

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

The idea behind Sabio Holdings and Inventus Mining Corp 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.

Check out your portfolio center.

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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.