Correlation Between STI Education and Semirara Mining

Can any of the company-specific risk be diversified away by investing in both STI Education and Semirara Mining 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 STI Education and Semirara Mining into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between STI Education Systems and Semirara Mining Corp, you can compare the effects of market volatilities on STI Education and Semirara Mining 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 STI Education with a short position of Semirara Mining. Check out your portfolio center. Please also check ongoing floating volatility patterns of STI Education and Semirara Mining.

Diversification Opportunities for STI Education and Semirara Mining

0.42

Correlation Coefficient

STI Education  Semirara Mining

Very weak diversification

The 3 months correlation between STI and Semirara is 0.42. Overlapping area represents the amount of risk that can be diversified away by holding STI Education Systems and Semirara Mining Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Semirara Mining Corp and STI Education 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 STI Education Systems are associated (or correlated) with Semirara Mining. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Semirara Mining Corp has no effect on the direction of STI Education i.e., STI Education and Semirara Mining go up and down completely randomly.

Pair Corralation between STI Education and Semirara Mining

Assuming the 90 days trading horizon STI Education Systems is expected to generate 1.97 times more return on investment than Semirara Mining. However, STI Education is 1.97 times more volatile than Semirara Mining Corp. It trades about 0.18 of its potential returns per unit of risk. Semirara Mining Corp is currently generating about 0.11 per unit of risk. If you would invest  44.00  in STI Education Systems on October 5, 2024 and sell it today you would earn a total of  93.00  from holding STI Education Systems or generate 211.36% return on investment over 90 days.

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

STI Education Systems  vs.  Semirara Mining Corp

STI Education Systems

Risk-Adjusted Performance

0 of 100

Modest

Over the last 90 days STI Education Systems has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather unsteady technical and fundamental indicators, STI Education may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Semirara Mining Corp

Risk-Adjusted Performance

0 of 100

OK

Over the last 90 days Semirara Mining Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather unsteady technical and fundamental indicators, Semirara Mining may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with STI Education and Semirara Mining

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

The idea behind STI Education Systems and Semirara Mining Corp 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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.