Correlation Between Sapiens International and Artisan Partners

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

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

Diversification Opportunities for Sapiens International and Artisan Partners

0.21

Correlation Coefficient

Sapiens International  Artisan Partners

Modest diversification

The 3 months correlation between Sapiens and Artisan is 0.21. Overlapping area represents the amount of risk that can be diversified away by holding Sapiens International and Artisan Partners Asset in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Artisan Partners Asset 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 Artisan Partners. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Artisan Partners Asset has no effect on the direction of Sapiens International i.e., Sapiens International and Artisan Partners go up and down completely randomly.

Pair Corralation between Sapiens International and Artisan Partners

Given the investment horizon of 90 days Sapiens International is expected to generate 0.87 times more return on investment than Artisan Partners. However, Sapiens International is 1.15 times less risky than Artisan Partners. It trades about 0.04 of its potential returns per unit of risk. Artisan Partners Asset is currently generating about -0.03 per unit of risk. If you would invest  2,674  in Sapiens International on December 29, 2024 and sell it today you would earn a total of  94.00  from holding Sapiens International or generate 3.52% return on investment over 90 days.

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

Sapiens International  vs.  Artisan Partners Asset

Sapiens International

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Sapiens International are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, Sapiens International is not utilizing all of its potentials. The latest stock price uproar, may contribute to short-horizon losses for the private investors.

Artisan Partners Asset

Risk-Adjusted Performance

Very Weak

Over the last 90 days Artisan Partners Asset has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy basic indicators, Artisan Partners is not utilizing all of its potentials. The latest stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Sapiens International and Artisan Partners

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

The idea behind Sapiens International and Artisan Partners Asset 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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.