Correlation Between Sirona Biochem and High Liner

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

By analyzing existing cross correlation between Sirona Biochem Corp and High Liner Foods, you can compare the effects of market volatilities on Sirona Biochem and High Liner 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 Sirona Biochem with a short position of High Liner. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sirona Biochem and High Liner.

Diversification Opportunities for Sirona Biochem and High Liner

-0.34

Correlation Coefficient

Sirona Biochem  High Liner

Very good diversification

The 3 months correlation between Sirona and High is -0.34. Overlapping area represents the amount of risk that can be diversified away by holding Sirona Biochem Corp and High Liner Foods in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on High Liner Foods and Sirona Biochem 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 Sirona Biochem Corp are associated (or correlated) with High Liner. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of High Liner Foods has no effect on the direction of Sirona Biochem i.e., Sirona Biochem and High Liner go up and down completely randomly.

Pair Corralation between Sirona Biochem and High Liner

Assuming the 90 days horizon Sirona Biochem Corp is expected to generate 6.36 times more return on investment than High Liner. However, Sirona Biochem is 6.36 times more volatile than High Liner Foods. It trades about 0.04 of its potential returns per unit of risk. High Liner Foods is currently generating about 0.04 per unit of risk. If you would invest  11.00  in Sirona Biochem Corp on October 4, 2024 and sell it today you would lose (5.00) from holding Sirona Biochem Corp or give up 45.45% of portfolio value over 90 days.

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

Sirona Biochem Corp  vs.  High Liner Foods

Sirona Biochem Corp

Risk-Adjusted Performance

0 of 100

Very Weak

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

High Liner Foods

Risk-Adjusted Performance

20 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in High Liner Foods are ranked lower than 20 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating technical and fundamental indicators, High Liner displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Sirona Biochem and High Liner

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

The idea behind Sirona Biochem Corp and High Liner Foods 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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.