Correlation Between SiS Distribution and Com7 PCL

Can any of the company-specific risk be diversified away by investing in both SiS Distribution and Com7 PCL 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 SiS Distribution and Com7 PCL into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between SiS Distribution Public and Com7 PCL, you can compare the effects of market volatilities on SiS Distribution and Com7 PCL 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 SiS Distribution with a short position of Com7 PCL. Check out your portfolio center. Please also check ongoing floating volatility patterns of SiS Distribution and Com7 PCL.

Diversification Opportunities for SiS Distribution and Com7 PCL

0.86

Correlation Coefficient

SiS Distribution  Com7 PCL

Very poor diversification

The 3 months correlation between SiS and Com7 is 0.86. Overlapping area represents the amount of risk that can be diversified away by holding SiS Distribution Public and Com7 PCL in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Com7 PCL and SiS Distribution 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 SiS Distribution Public are associated (or correlated) with Com7 PCL. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Com7 PCL has no effect on the direction of SiS Distribution i.e., SiS Distribution and Com7 PCL go up and down completely randomly.

Pair Corralation between SiS Distribution and Com7 PCL

Assuming the 90 days trading horizon SiS Distribution Public is expected to generate 1.11 times more return on investment than Com7 PCL. However, SiS Distribution is 1.11 times more volatile than Com7 PCL. It trades about -0.11 of its potential returns per unit of risk. Com7 PCL is currently generating about -0.21 per unit of risk. If you would invest  2,722  in SiS Distribution Public on December 27, 2024 and sell it today you would lose (402.00) from holding SiS Distribution Public or give up 14.77% of portfolio value over 90 days.

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

SiS Distribution Public  vs.  Com7 PCL

SiS Distribution Public

Risk-Adjusted Performance

Very Weak

Over the last 90 days SiS Distribution Public 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 quite persistent which may send shares a bit higher in April 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Com7 PCL

Risk-Adjusted Performance

Very Weak

Over the last 90 days Com7 PCL 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 forward-looking signals remain quite persistent which may send shares a bit higher in April 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Pair Trading with SiS Distribution and Com7 PCL

The main advantage of trading using opposite SiS Distribution and Com7 PCL positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SiS Distribution position performs unexpectedly, Com7 PCL 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 Com7 PCL will offset losses from the drop in Com7 PCL's long position.

The idea behind SiS Distribution Public and Com7 PCL 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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.