Correlation Between Sidma SA and Lampsa Hellenic

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

Diversification Opportunities for Sidma SA and Lampsa Hellenic

0.24

Correlation Coefficient

Sidma SA  Lampsa Hellenic

Modest diversification

The 3 months correlation between Sidma and Lampsa is 0.24. Overlapping area represents the amount of risk that can be diversified away by holding Sidma SA Steel and Lampsa Hellenic Hotels in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lampsa Hellenic Hotels 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 Lampsa Hellenic. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lampsa Hellenic Hotels has no effect on the direction of Sidma SA i.e., Sidma SA and Lampsa Hellenic go up and down completely randomly.

Pair Corralation between Sidma SA and Lampsa Hellenic

Assuming the 90 days trading horizon Sidma SA Steel is expected to under-perform the Lampsa Hellenic. In addition to that, Sidma SA is 1.91 times more volatile than Lampsa Hellenic Hotels. It trades about -0.07 of its total potential returns per unit of risk. Lampsa Hellenic Hotels is currently generating about 0.02 per unit of volatility. If you would invest  3,700  in Lampsa Hellenic Hotels on September 5, 2024 and sell it today you would earn a total of  40.00  from holding Lampsa Hellenic Hotels or generate 1.08% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	98.44%
Values	Daily Returns

Sidma SA Steel  vs.  Lampsa Hellenic Hotels

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.

Lampsa Hellenic Hotels

Risk-Adjusted Performance

1 of 100

Weak

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

Pair Trading with Sidma SA and Lampsa Hellenic

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

The idea behind Sidma SA Steel and Lampsa Hellenic Hotels 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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.