Correlation Between Sidma SA and Lanakam SA

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

Diversification Opportunities for Sidma SA and Lanakam SA

0.36

Correlation Coefficient

Sidma SA  Lanakam SA

Weak diversification

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

Pair Corralation between Sidma SA and Lanakam SA

Assuming the 90 days trading horizon Sidma SA Steel is expected to under-perform the Lanakam SA. But the stock apears to be less risky and, when comparing its historical volatility, Sidma SA Steel is 1.44 times less risky than Lanakam SA. The stock trades about -0.03 of its potential returns per unit of risk. The Lanakam SA is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest  94.00  in Lanakam SA on October 20, 2024 and sell it today you would earn a total of  9.00  from holding Lanakam SA or generate 9.57% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	99.03%
Values	Daily Returns

Sidma SA Steel  vs.  Lanakam SA

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 somewhat strong basic indicators, Sidma SA is not utilizing all of its potentials. The newest stock price disturbance, may contribute to short-term losses for the investors.

Lanakam SA

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Lanakam SA are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite somewhat uncertain basic indicators, Lanakam SA sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Sidma SA and Lanakam SA

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

The idea behind Sidma SA Steel and Lanakam 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 Stocks Directory module to find actively traded stocks across global markets.