Correlation Between Sarofim Equity and Harding Loevner

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

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

Diversification Opportunities for Sarofim Equity and Harding Loevner

-0.25

Correlation Coefficient

Sarofim Equity  Harding Loevner

Very good diversification

The 3 months correlation between Sarofim and Harding is -0.25. Overlapping area represents the amount of risk that can be diversified away by holding Sarofim Equity and Harding Loevner Chinese in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Harding Loevner Chinese and Sarofim Equity 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 Sarofim Equity are associated (or correlated) with Harding Loevner. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Harding Loevner Chinese has no effect on the direction of Sarofim Equity i.e., Sarofim Equity and Harding Loevner go up and down completely randomly.

Pair Corralation between Sarofim Equity and Harding Loevner

Assuming the 90 days horizon Sarofim Equity is expected to under-perform the Harding Loevner. But the mutual fund apears to be less risky and, when comparing its historical volatility, Sarofim Equity is 1.51 times less risky than Harding Loevner. The mutual fund trades about -0.07 of its potential returns per unit of risk. The Harding Loevner Chinese is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest  530.00  in Harding Loevner Chinese on December 30, 2024 and sell it today you would earn a total of  36.00  from holding Harding Loevner Chinese or generate 6.79% return on investment over 90 days.

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

Sarofim Equity  vs.  Harding Loevner Chinese

Sarofim Equity

Risk-Adjusted Performance

Very Weak

Over the last 90 days Sarofim Equity has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong primary indicators, Sarofim Equity is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Harding Loevner Chinese

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Harding Loevner Chinese are ranked lower than 6 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak fundamental indicators, Harding Loevner may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Sarofim Equity and Harding Loevner

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

The idea behind Sarofim Equity and Harding Loevner Chinese 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 Equity Valuation module to check real value of public entities based on technical and fundamental data.