Correlation Between Sgd Holdings and American Diversified

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

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

Diversification Opportunities for Sgd Holdings and American Diversified

-0.14

Correlation Coefficient

Sgd Holdings  American Diversified

Good diversification

The 3 months correlation between Sgd and American is -0.14. Overlapping area represents the amount of risk that can be diversified away by holding Sgd Holdings and American Diversified Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on American Diversified and Sgd 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 Sgd Holdings are associated (or correlated) with American Diversified. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of American Diversified has no effect on the direction of Sgd Holdings i.e., Sgd Holdings and American Diversified go up and down completely randomly.

Pair Corralation between Sgd Holdings and American Diversified

Given the investment horizon of 90 days Sgd Holdings is expected to generate 0.61 times more return on investment than American Diversified. However, Sgd Holdings is 1.63 times less risky than American Diversified. It trades about 0.04 of its potential returns per unit of risk. American Diversified Holdings is currently generating about 0.0 per unit of risk. If you would invest  0.47  in Sgd Holdings on December 28, 2024 and sell it today you would lose (0.01) from holding Sgd Holdings or give up 2.13% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	96.77%
Values	Daily Returns

Sgd Holdings  vs.  American Diversified Holdings

Sgd Holdings

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Sgd Holdings are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite fairly fragile fundamental indicators, Sgd Holdings demonstrated solid returns over the last few months and may actually be approaching a breakup point.

American Diversified

Risk-Adjusted Performance

Very Weak

Over the last 90 days American Diversified Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound technical indicators, American Diversified is not utilizing all of its potentials. The recent stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Sgd Holdings and American Diversified

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

The idea behind Sgd Holdings and American Diversified Holdings 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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.