Correlation Between Strauss and Salomon A

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

By analyzing existing cross correlation between Strauss Group and Salomon A Angel, you can compare the effects of market volatilities on Strauss and Salomon A 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 Strauss with a short position of Salomon A. Check out your portfolio center. Please also check ongoing floating volatility patterns of Strauss and Salomon A.

Diversification Opportunities for Strauss and Salomon A

0.8

Correlation Coefficient

Strauss  Salomon A

Very poor diversification

The 3 months correlation between Strauss and Salomon is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding Strauss Group and Salomon A Angel in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Salomon A Angel and Strauss 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 Strauss Group are associated (or correlated) with Salomon A. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Salomon A Angel has no effect on the direction of Strauss i.e., Strauss and Salomon A go up and down completely randomly.

Pair Corralation between Strauss and Salomon A

Assuming the 90 days trading horizon Strauss Group is expected to generate 0.73 times more return on investment than Salomon A. However, Strauss Group is 1.37 times less risky than Salomon A. It trades about 0.16 of its potential returns per unit of risk. Salomon A Angel is currently generating about 0.03 per unit of risk. If you would invest  608,200  in Strauss Group on October 20, 2024 and sell it today you would earn a total of  114,400  from holding Strauss Group or generate 18.81% return on investment over 90 days.

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

Strauss Group  vs.  Salomon A Angel

Strauss Group

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Strauss Group are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Strauss sustained solid returns over the last few months and may actually be approaching a breakup point.

Salomon A Angel

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Salomon A Angel are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, Salomon A is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Strauss and Salomon A

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

The idea behind Strauss Group and Salomon A Angel 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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.