Correlation Between Sapiens International and Matrix

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

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

Diversification Opportunities for Sapiens International and Matrix

-0.07

Correlation Coefficient

Sapiens International  Matrix

Good diversification

The 3 months correlation between Sapiens and Matrix is -0.07. Overlapping area represents the amount of risk that can be diversified away by holding Sapiens International and Matrix in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Matrix and Sapiens International 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 Sapiens International are associated (or correlated) with Matrix. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Matrix has no effect on the direction of Sapiens International i.e., Sapiens International and Matrix go up and down completely randomly.

Pair Corralation between Sapiens International and Matrix

Assuming the 90 days trading horizon Sapiens International is expected to generate 1.43 times less return on investment than Matrix. But when comparing it to its historical volatility, Sapiens International is 1.14 times less risky than Matrix. It trades about 0.06 of its potential returns per unit of risk. Matrix is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest  829,090  in Matrix on December 30, 2024 and sell it today you would earn a total of  54,810  from holding Matrix or generate 6.61% return on investment over 90 days.

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

Sapiens International  vs.  Matrix

Sapiens International

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Sapiens International are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, Sapiens International is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Matrix

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Matrix are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Matrix may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Sapiens International and Matrix

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

The idea behind Sapiens International and Matrix 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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.