Correlation Between Sonic Interfreight and North East

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

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

Diversification Opportunities for Sonic Interfreight and North East

-0.52

Correlation Coefficient

Sonic Interfreight  North East

Excellent diversification

The 3 months correlation between Sonic and North is -0.52. Overlapping area represents the amount of risk that can be diversified away by holding Sonic Interfreight Public and North East Rubbers in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on North East Rubbers and Sonic Interfreight 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 Sonic Interfreight Public are associated (or correlated) with North East. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of North East Rubbers has no effect on the direction of Sonic Interfreight i.e., Sonic Interfreight and North East go up and down completely randomly.

Pair Corralation between Sonic Interfreight and North East

Assuming the 90 days trading horizon Sonic Interfreight Public is expected to generate 1.13 times more return on investment than North East. However, Sonic Interfreight is 1.13 times more volatile than North East Rubbers. It trades about -0.21 of its potential returns per unit of risk. North East Rubbers is currently generating about -0.3 per unit of risk. If you would invest  170.00  in Sonic Interfreight Public on October 13, 2024 and sell it today you would lose (8.00) from holding Sonic Interfreight Public or give up 4.71% of portfolio value over 90 days.

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

Sonic Interfreight Public  vs.  North East Rubbers

Sonic Interfreight Public

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Sonic Interfreight Public are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong fundamental drivers, Sonic Interfreight is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

North East Rubbers

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days North East Rubbers has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's basic indicators remain persistent and the latest mess on Wall Street may also be a sign of long-standing gains for the company institutional investors.

Pair Trading with Sonic Interfreight and North East

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

The idea behind Sonic Interfreight Public and North East Rubbers 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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.