Correlation Between Saat Defensive and Sei Insti

Can any of the company-specific risk be diversified away by investing in both Saat Defensive and Sei Insti 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 Saat Defensive and Sei Insti into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Saat Defensive Strategy and Sei Insti Mgd, you can compare the effects of market volatilities on Saat Defensive and Sei Insti 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 Saat Defensive with a short position of Sei Insti. Check out your portfolio center. Please also check ongoing floating volatility patterns of Saat Defensive and Sei Insti.

Diversification Opportunities for Saat Defensive and Sei Insti

0.23

Correlation Coefficient

Saat Defensive  Sei Insti

Modest diversification

The 3 months correlation between Saat and Sei is 0.23. Overlapping area represents the amount of risk that can be diversified away by holding Saat Defensive Strategy and Sei Insti Mgd in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sei Insti Mgd and Saat Defensive 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 Saat Defensive Strategy are associated (or correlated) with Sei Insti. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sei Insti Mgd has no effect on the direction of Saat Defensive i.e., Saat Defensive and Sei Insti go up and down completely randomly.

Pair Corralation between Saat Defensive and Sei Insti

Assuming the 90 days horizon Saat Defensive is expected to generate 4.75 times less return on investment than Sei Insti. But when comparing it to its historical volatility, Saat Defensive Strategy is 8.65 times less risky than Sei Insti. It trades about 0.56 of its potential returns per unit of risk. Sei Insti Mgd is currently generating about 0.31 of returns per unit of risk over similar time horizon. If you would invest  939.00  in Sei Insti Mgd on December 4, 2024 and sell it today you would earn a total of  20.00  from holding Sei Insti Mgd or generate 2.13% return on investment over 90 days.

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

Saat Defensive Strategy  vs.  Sei Insti Mgd

Saat Defensive Strategy

Risk-Adjusted Performance

Very Strong

Compared to the overall equity markets, risk-adjusted returns on investments in Saat Defensive Strategy are ranked lower than 33 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Saat Defensive is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Sei Insti Mgd

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Sei Insti Mgd are ranked lower than 2 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong forward indicators, Sei Insti is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Saat Defensive and Sei Insti

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

The idea behind Saat Defensive Strategy and Sei Insti Mgd 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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.