Correlation Between Transcontinental and Sachem Capital

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

By analyzing existing cross correlation between Transcontinental Realty Investors and Sachem Capital Corp, you can compare the effects of market volatilities on Transcontinental and Sachem Capital 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 Transcontinental with a short position of Sachem Capital. Check out your portfolio center. Please also check ongoing floating volatility patterns of Transcontinental and Sachem Capital.

Diversification Opportunities for Transcontinental and Sachem Capital

0.58

Correlation Coefficient

Transcontinental  Sachem Capital

Very weak diversification

The 3 months correlation between Transcontinental and Sachem is 0.58. Overlapping area represents the amount of risk that can be diversified away by holding Transcontinental Realty Invest and Sachem Capital Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sachem Capital Corp and Transcontinental 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 Transcontinental Realty Investors are associated (or correlated) with Sachem Capital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sachem Capital Corp has no effect on the direction of Transcontinental i.e., Transcontinental and Sachem Capital go up and down completely randomly.

Pair Corralation between Transcontinental and Sachem Capital

Considering the 90-day investment horizon Transcontinental Realty Investors is expected to under-perform the Sachem Capital. In addition to that, Transcontinental is 9.77 times more volatile than Sachem Capital Corp. It trades about -0.04 of its total potential returns per unit of risk. Sachem Capital Corp is currently generating about 0.18 per unit of volatility. If you would invest  2,340  in Sachem Capital Corp on October 9, 2024 and sell it today you would earn a total of  158.00  from holding Sachem Capital Corp or generate 6.75% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	97.31%
Values	Daily Returns

Transcontinental Realty Invest  vs.  Sachem Capital Corp

Transcontinental Realty

Risk-Adjusted Performance

4 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Transcontinental Realty Investors are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite fairly inconsistent fundamental indicators, Transcontinental may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Sachem Capital Corp

Risk-Adjusted Performance

0 of 100

Good

Over the last 90 days Sachem Capital Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound fundamental indicators, Sachem Capital is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Transcontinental and Sachem Capital

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

The idea behind Transcontinental Realty Investors and Sachem Capital 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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.