Correlation Between SONASID and SALAFIN

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

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

Diversification Opportunities for SONASID and SALAFIN

0.0

Correlation Coefficient

SONASID  SALAFIN

Pay attention - limited upside

The 3 months correlation between SONASID and SALAFIN is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding SONASID and SALAFIN in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SALAFIN and SONASID 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 SONASID are associated (or correlated) with SALAFIN. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SALAFIN has no effect on the direction of SONASID i.e., SONASID and SALAFIN go up and down completely randomly.

Pair Corralation between SONASID and SALAFIN

If you would invest (100.00) in SALAFIN on October 25, 2024 and sell it today you would earn a total of  100.00  from holding SALAFIN or generate -100.0% return on investment over 90 days.

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

SONASID  vs.  SALAFIN

SONASID

Risk-Adjusted Performance

0 of 100

Good

Over the last 90 days SONASID has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound basic indicators, SONASID is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.

SALAFIN

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in SALAFIN are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy basic indicators, SALAFIN is not utilizing all of its potentials. The current stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with SONASID and SALAFIN

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

The idea behind SONASID and SALAFIN 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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.