Correlation Between Sapiens International and Safety Shot

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

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

Diversification Opportunities for Sapiens International and Safety Shot

0.8

Correlation Coefficient

Sapiens International  Safety Shot

Very poor diversification

The 3 months correlation between Sapiens and Safety is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding Sapiens International and Safety Shot in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Safety Shot 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 Safety Shot. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Safety Shot has no effect on the direction of Sapiens International i.e., Sapiens International and Safety Shot go up and down completely randomly.

Pair Corralation between Sapiens International and Safety Shot

Given the investment horizon of 90 days Sapiens International is expected to generate 0.8 times more return on investment than Safety Shot. However, Sapiens International is 1.25 times less risky than Safety Shot. It trades about -0.13 of its potential returns per unit of risk. Safety Shot is currently generating about -0.28 per unit of risk. If you would invest  3,681  in Sapiens International on October 24, 2024 and sell it today you would lose (1,038) from holding Sapiens International or give up 28.2% of portfolio value over 90 days.

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

Sapiens International  vs.  Safety Shot

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 February 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Safety Shot

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Sapiens International and Safety Shot

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

The idea behind Sapiens International and Safety Shot 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 Global Correlations module to find global opportunities by holding instruments from different markets.