Correlation Between Sidma SA and Viohalco

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

Diversification Opportunities for Sidma SA and Viohalco

-0.32

Correlation Coefficient

Sidma SA  Viohalco

Very good diversification

The 3 months correlation between Sidma and Viohalco is -0.32. Overlapping area represents the amount of risk that can be diversified away by holding Sidma SA Steel and Viohalco SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Viohalco 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 Viohalco. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Viohalco SA has no effect on the direction of Sidma SA i.e., Sidma SA and Viohalco go up and down completely randomly.

Pair Corralation between Sidma SA and Viohalco

Assuming the 90 days trading horizon Sidma SA Steel is expected to under-perform the Viohalco. But the stock apears to be less risky and, when comparing its historical volatility, Sidma SA Steel is 1.11 times less risky than Viohalco. The stock trades about -0.04 of its potential returns per unit of risk. The Viohalco SA is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest  537.00  in Viohalco SA on December 30, 2024 and sell it today you would earn a total of  79.00  from holding Viohalco SA or generate 14.71% return on investment over 90 days.

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

Sidma SA Steel  vs.  Viohalco SA

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 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.

Viohalco SA

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Viohalco SA are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak basic indicators, Viohalco unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Sidma SA and Viohalco

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

The idea behind Sidma SA Steel and Viohalco 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.

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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..