Correlation Between Sidma SA and Cenergy Holdings

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

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

Diversification Opportunities for Sidma SA and Cenergy Holdings

0.65

Correlation Coefficient

Sidma SA  Cenergy Holdings

Poor diversification

The 3 months correlation between Sidma and Cenergy is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding Sidma SA Steel and Cenergy Holdings SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cenergy Holdings and Sidma SA 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 Sidma SA Steel are associated (or correlated) with Cenergy Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cenergy Holdings has no effect on the direction of Sidma SA i.e., Sidma SA and Cenergy Holdings go up and down completely randomly.

Pair Corralation between Sidma SA and Cenergy Holdings

Assuming the 90 days trading horizon Sidma SA is expected to generate 11.39 times less return on investment than Cenergy Holdings. In addition to that, Sidma SA is 1.27 times more volatile than Cenergy Holdings SA. It trades about 0.03 of its total potential returns per unit of risk. Cenergy Holdings SA is currently generating about 0.47 per unit of volatility. If you would invest  900.00  in Cenergy Holdings SA on October 10, 2024 and sell it today you would earn a total of  83.00  from holding Cenergy Holdings SA or generate 9.22% return on investment over 90 days.

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

Sidma SA Steel  vs.  Cenergy Holdings SA

Sidma SA Steel

Risk-Adjusted Performance

1 of 100

Very Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Sidma SA Steel are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, Sidma SA is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Cenergy Holdings

Risk-Adjusted Performance

5 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Cenergy Holdings SA are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite somewhat uncertain basic indicators, Cenergy Holdings may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Sidma SA and Cenergy Holdings

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

The idea behind Sidma SA Steel and Cenergy Holdings SA 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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.