Correlation Between Sidma SA and Kordellos

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

Diversification Opportunities for Sidma SA and Kordellos

0.36

Correlation Coefficient

Sidma SA  Kordellos

Weak diversification

The 3 months correlation between Sidma and Kordellos is 0.36. Overlapping area represents the amount of risk that can be diversified away by holding Sidma SA Steel and Kordellos Ch Bros in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kordellos Ch Bros 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 Kordellos. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kordellos Ch Bros has no effect on the direction of Sidma SA i.e., Sidma SA and Kordellos go up and down completely randomly.

Pair Corralation between Sidma SA and Kordellos

Assuming the 90 days trading horizon Sidma SA Steel is expected to under-perform the Kordellos. But the stock apears to be less risky and, when comparing its historical volatility, Sidma SA Steel is 1.54 times less risky than Kordellos. The stock trades about -0.06 of its potential returns per unit of risk. The Kordellos Ch Bros is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest  42.00  in Kordellos Ch Bros on December 26, 2024 and sell it today you would earn a total of  2.00  from holding Kordellos Ch Bros or generate 4.76% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	98.36%
Values	Daily Returns

Sidma SA Steel  vs.  Kordellos Ch Bros

Sidma SA Steel

Risk-Adjusted Performance

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.

Kordellos Ch Bros

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Kordellos Ch Bros are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite somewhat uncertain basic indicators, Kordellos may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Sidma SA and Kordellos

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

The idea behind Sidma SA Steel and Kordellos Ch Bros 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 Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.