Correlation Between Saat Defensive and Short Term

Can any of the company-specific risk be diversified away by investing in both Saat Defensive and Short Term 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 Short Term 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 Short Term Government Fund, you can compare the effects of market volatilities on Saat Defensive and Short Term 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 Short Term. Check out your portfolio center. Please also check ongoing floating volatility patterns of Saat Defensive and Short Term.

Diversification Opportunities for Saat Defensive and Short Term

0.72

Correlation Coefficient

Saat Defensive  Short Term

Poor diversification

The 3 months correlation between Saat and Short is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding Saat Defensive Strategy and Short Term Government Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Short Term Government 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 Short Term. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Short Term Government has no effect on the direction of Saat Defensive i.e., Saat Defensive and Short Term go up and down completely randomly.

Pair Corralation between Saat Defensive and Short Term

Assuming the 90 days horizon Saat Defensive Strategy is expected to generate 0.34 times more return on investment than Short Term. However, Saat Defensive Strategy is 2.96 times less risky than Short Term. It trades about 0.35 of its potential returns per unit of risk. Short Term Government Fund is currently generating about 0.08 per unit of risk. If you would invest  1,009  in Saat Defensive Strategy on October 25, 2024 and sell it today you would earn a total of  108.00  from holding Saat Defensive Strategy or generate 10.7% return on investment over 90 days.

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

Saat Defensive Strategy  vs.  Short Term Government Fund

Saat Defensive Strategy

Risk-Adjusted Performance

33 of 100

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.

Short Term Government

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Short Term Government Fund are ranked lower than 5 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Short Term 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 Short Term

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

The idea behind Saat Defensive Strategy and Short Term Government Fund 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.