Correlation Between Sebata Holdings and Advtech

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

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

Diversification Opportunities for Sebata Holdings and Advtech

-0.3

Correlation Coefficient

Sebata Holdings  Advtech

Very good diversification

The 3 months correlation between Sebata and Advtech is -0.3. Overlapping area represents the amount of risk that can be diversified away by holding Sebata Holdings and Advtech in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Advtech and Sebata 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 Sebata Holdings are associated (or correlated) with Advtech. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Advtech has no effect on the direction of Sebata Holdings i.e., Sebata Holdings and Advtech go up and down completely randomly.

Pair Corralation between Sebata Holdings and Advtech

Assuming the 90 days trading horizon Sebata Holdings is expected to generate 3.0 times more return on investment than Advtech. However, Sebata Holdings is 3.0 times more volatile than Advtech. It trades about 0.07 of its potential returns per unit of risk. Advtech is currently generating about -0.07 per unit of risk. If you would invest  9,500  in Sebata Holdings on September 28, 2024 and sell it today you would earn a total of  300.00  from holding Sebata Holdings or generate 3.16% return on investment over 90 days.

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

Sebata Holdings  vs.  Advtech

Sebata Holdings

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Sebata Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unsteady performance, the Stock's technical and fundamental indicators remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for the firm shareholders.

Advtech

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Advtech are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound technical and fundamental indicators, Advtech is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Sebata Holdings and Advtech

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

The idea behind Sebata Holdings and Advtech 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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.