Correlation Between Sidma SA and Intertech

Can any of the company-specific risk be diversified away by investing in both Sidma SA and Intertech 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 Intertech 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 Intertech SA Inter, you can compare the effects of market volatilities on Sidma SA and Intertech 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 Intertech. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sidma SA and Intertech.

Diversification Opportunities for Sidma SA and Intertech

0.78

Correlation Coefficient

Sidma SA  Intertech

Poor diversification

The 3 months correlation between Sidma and Intertech is 0.78. Overlapping area represents the amount of risk that can be diversified away by holding Sidma SA Steel and Intertech SA Inter in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Intertech SA Inter 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 Intertech. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Intertech SA Inter has no effect on the direction of Sidma SA i.e., Sidma SA and Intertech go up and down completely randomly.

Pair Corralation between Sidma SA and Intertech

Assuming the 90 days trading horizon Sidma SA Steel is expected to generate 0.71 times more return on investment than Intertech. However, Sidma SA Steel is 1.41 times less risky than Intertech. It trades about -0.07 of its potential returns per unit of risk. Intertech SA Inter is currently generating about -0.11 per unit of risk. If you would invest  168.00  in Sidma SA Steel on September 5, 2024 and sell it today you would lose (13.00) from holding Sidma SA Steel or give up 7.74% of portfolio value over 90 days.

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

Sidma SA Steel  vs.  Intertech SA Inter

Sidma SA Steel

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Sidma SA Steel has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Intertech SA Inter

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Intertech SA Inter has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain somewhat strong which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with Sidma SA and Intertech

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

The idea behind Sidma SA Steel and Intertech SA Inter 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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.