Correlation Between Sims and Telix Pharmaceuticals

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

By analyzing existing cross correlation between Sims and Telix Pharmaceuticals, you can compare the effects of market volatilities on Sims and Telix Pharmaceuticals 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 Telix Pharmaceuticals. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sims and Telix Pharmaceuticals.

Diversification Opportunities for Sims and Telix Pharmaceuticals

0.2

Correlation Coefficient

Sims  Telix Pharmaceuticals

Modest diversification

The 3 months correlation between Sims and Telix is 0.2. Overlapping area represents the amount of risk that can be diversified away by holding Sims and Telix Pharmaceuticals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Telix Pharmaceuticals 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 Telix Pharmaceuticals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Telix Pharmaceuticals has no effect on the direction of Sims i.e., Sims and Telix Pharmaceuticals go up and down completely randomly.

Pair Corralation between Sims and Telix Pharmaceuticals

Assuming the 90 days trading horizon Sims is expected to generate 40.36 times less return on investment than Telix Pharmaceuticals. But when comparing it to its historical volatility, Sims is 1.53 times less risky than Telix Pharmaceuticals. It trades about 0.0 of its potential returns per unit of risk. Telix Pharmaceuticals is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest  701.00  in Telix Pharmaceuticals on September 21, 2024 and sell it today you would earn a total of  1,866  from holding Telix Pharmaceuticals or generate 266.19% return on investment over 90 days.

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

Sims  vs.  Telix Pharmaceuticals

Sims

Risk-Adjusted Performance

0 of 100

Very Weak

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

Telix Pharmaceuticals

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Telix Pharmaceuticals are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Telix Pharmaceuticals unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Sims and Telix Pharmaceuticals

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

The idea behind Sims and Telix Pharmaceuticals 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 Portfolio Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.