Correlation Between Sit Government and Ab Global

Can any of the company-specific risk be diversified away by investing in both Sit Government and Ab Global 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 Sit Government and Ab Global into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Sit Government Securities and Ab Global Real, you can compare the effects of market volatilities on Sit Government and Ab Global 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 Sit Government with a short position of Ab Global. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sit Government and Ab Global.

Diversification Opportunities for Sit Government and Ab Global

0.89

Correlation Coefficient

Sit Government  Ab Global

Very poor diversification

The 3 months correlation between Sit and ARECX is 0.89. Overlapping area represents the amount of risk that can be diversified away by holding Sit Government Securities and Ab Global Real in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ab Global Real and Sit Government 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 Sit Government Securities are associated (or correlated) with Ab Global. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ab Global Real has no effect on the direction of Sit Government i.e., Sit Government and Ab Global go up and down completely randomly.

Pair Corralation between Sit Government and Ab Global

Assuming the 90 days horizon Sit Government Securities is expected to generate 0.29 times more return on investment than Ab Global. However, Sit Government Securities is 3.47 times less risky than Ab Global. It trades about -0.12 of its potential returns per unit of risk. Ab Global Real is currently generating about -0.13 per unit of risk. If you would invest  1,044  in Sit Government Securities on September 13, 2024 and sell it today you would lose (17.00) from holding Sit Government Securities or give up 1.63% of portfolio value over 90 days.

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

Sit Government Securities  vs.  Ab Global Real

Sit Government Securities

Risk-Adjusted Performance

0 of 100

Very Weak

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

Ab Global Real

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Sit Government and Ab Global

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

The idea behind Sit Government Securities and Ab Global Real 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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.