Correlation Between Sims and Elixinol Wellness

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

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

Diversification Opportunities for Sims and Elixinol Wellness

-0.52

Correlation Coefficient

Sims  Elixinol Wellness

Excellent diversification

The 3 months correlation between Sims and Elixinol is -0.52. Overlapping area represents the amount of risk that can be diversified away by holding Sims and Elixinol Wellness Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Elixinol Wellness and Sims 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 Sims are associated (or correlated) with Elixinol Wellness. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Elixinol Wellness has no effect on the direction of Sims i.e., Sims and Elixinol Wellness go up and down completely randomly.

Pair Corralation between Sims and Elixinol Wellness

Assuming the 90 days trading horizon Sims is expected to generate 0.22 times more return on investment than Elixinol Wellness. However, Sims is 4.55 times less risky than Elixinol Wellness. It trades about 0.11 of its potential returns per unit of risk. Elixinol Wellness Limited is currently generating about -0.01 per unit of risk. If you would invest  1,294  in Sims on December 5, 2024 and sell it today you would earn a total of  137.00  from holding Sims or generate 10.59% return on investment over 90 days.

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

Sims  vs.  Elixinol Wellness Limited

Sims

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Sims are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain primary indicators, Sims may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Elixinol Wellness

Risk-Adjusted Performance

Very Weak

Over the last 90 days Elixinol Wellness Limited has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable essential indicators, Elixinol Wellness is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Sims and Elixinol Wellness

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

The idea behind Sims and Elixinol Wellness Limited 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 Stocks Directory module to find actively traded stocks across global markets.