Correlation Between Seraphim Space and Pentair PLC

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

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

Diversification Opportunities for Seraphim Space and Pentair PLC

-0.49

Correlation Coefficient

Seraphim Space  Pentair PLC

Very good diversification

The 3 months correlation between Seraphim and Pentair is -0.49. Overlapping area represents the amount of risk that can be diversified away by holding Seraphim Space Investment and Pentair PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pentair PLC and Seraphim Space 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 Seraphim Space Investment are associated (or correlated) with Pentair PLC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pentair PLC has no effect on the direction of Seraphim Space i.e., Seraphim Space and Pentair PLC go up and down completely randomly.

Pair Corralation between Seraphim Space and Pentair PLC

Assuming the 90 days trading horizon Seraphim Space Investment is expected to generate 2.23 times more return on investment than Pentair PLC. However, Seraphim Space is 2.23 times more volatile than Pentair PLC. It trades about 0.05 of its potential returns per unit of risk. Pentair PLC is currently generating about -0.2 per unit of risk. If you would invest  5,440  in Seraphim Space Investment on December 25, 2024 and sell it today you would earn a total of  360.00  from holding Seraphim Space Investment or generate 6.62% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	93.55%
Values	Daily Returns

Seraphim Space Investment  vs.  Pentair PLC

Seraphim Space Investment

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Seraphim Space Investment are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Seraphim Space may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pentair PLC

Risk-Adjusted Performance

Very Weak

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

Pair Trading with Seraphim Space and Pentair PLC

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

The idea behind Seraphim Space Investment and Pentair PLC 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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.