Correlation Between Saat Moderate and Caldwell Orkin

Can any of the company-specific risk be diversified away by investing in both Saat Moderate and Caldwell Orkin 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 Saat Moderate and Caldwell Orkin into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Saat Moderate Strategy and Caldwell Orkin Market, you can compare the effects of market volatilities on Saat Moderate and Caldwell Orkin 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 Saat Moderate with a short position of Caldwell Orkin. Check out your portfolio center. Please also check ongoing floating volatility patterns of Saat Moderate and Caldwell Orkin.

Diversification Opportunities for Saat Moderate and Caldwell Orkin

0.66

Correlation Coefficient

Saat Moderate  Caldwell Orkin

Poor diversification

The 3 months correlation between Saat and Caldwell is 0.66. Overlapping area represents the amount of risk that can be diversified away by holding Saat Moderate Strategy and Caldwell Orkin Market in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Caldwell Orkin Market and Saat Moderate 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 Saat Moderate Strategy are associated (or correlated) with Caldwell Orkin. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Caldwell Orkin Market has no effect on the direction of Saat Moderate i.e., Saat Moderate and Caldwell Orkin go up and down completely randomly.

Pair Corralation between Saat Moderate and Caldwell Orkin

Assuming the 90 days horizon Saat Moderate is expected to generate 6.01 times less return on investment than Caldwell Orkin. But when comparing it to its historical volatility, Saat Moderate Strategy is 4.53 times less risky than Caldwell Orkin. It trades about 0.08 of its potential returns per unit of risk. Caldwell Orkin Market is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest  4,318  in Caldwell Orkin Market on December 5, 2024 and sell it today you would earn a total of  754.00  from holding Caldwell Orkin Market or generate 17.46% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	99.19%
Values	Daily Returns

Saat Moderate Strategy  vs.  Caldwell Orkin Market

Saat Moderate Strategy

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Saat Moderate Strategy are ranked lower than 3 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Saat Moderate is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Caldwell Orkin Market

Risk-Adjusted Performance

Very Weak

Over the last 90 days Caldwell Orkin Market has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong technical and fundamental indicators, Caldwell Orkin is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Saat Moderate and Caldwell Orkin

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

The idea behind Saat Moderate Strategy and Caldwell Orkin Market 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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.