Correlation Between Sapiens International and Loar Holdings

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

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

Diversification Opportunities for Sapiens International and Loar Holdings

-0.57

Correlation Coefficient

Sapiens International  Loar Holdings

Excellent diversification

The 3 months correlation between Sapiens and Loar is -0.57. Overlapping area represents the amount of risk that can be diversified away by holding Sapiens International and Loar Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Loar Holdings 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 Loar Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Loar Holdings has no effect on the direction of Sapiens International i.e., Sapiens International and Loar Holdings go up and down completely randomly.

Pair Corralation between Sapiens International and Loar Holdings

Given the investment horizon of 90 days Sapiens International is expected to generate 28.75 times less return on investment than Loar Holdings. But when comparing it to its historical volatility, Sapiens International is 2.88 times less risky than Loar Holdings. It trades about 0.01 of its potential returns per unit of risk. Loar Holdings is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest  2,800  in Loar Holdings on September 17, 2024 and sell it today you would earn a total of  5,114  from holding Loar Holdings or generate 182.64% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	66.4%
Values	Daily Returns

Sapiens International  vs.  Loar Holdings

Sapiens International

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Sapiens International has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of abnormal performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in January 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Loar Holdings

Risk-Adjusted Performance

2 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Loar Holdings are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Even with relatively invariable basic indicators, Loar Holdings is not utilizing all of its potentials. The newest stock price agitation, may contribute to short-term losses for the retail investors.

Pair Trading with Sapiens International and Loar Holdings

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

The idea behind Sapiens International and Loar Holdings 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 Managers module to screen money managers from public funds and ETFs managed around the world.