Correlation Between Government Securities and Saat Moderate

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

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

Diversification Opportunities for Government Securities and Saat Moderate

0.81

Correlation Coefficient

Government Securities  Saat Moderate

Very poor diversification

The 3 months correlation between Government and Saat is 0.81. Overlapping area represents the amount of risk that can be diversified away by holding Government Securities Fund and Saat Moderate Strategy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Saat Moderate Strategy and Government Securities 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 Government Securities Fund are associated (or correlated) with Saat Moderate. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Saat Moderate Strategy has no effect on the direction of Government Securities i.e., Government Securities and Saat Moderate go up and down completely randomly.

Pair Corralation between Government Securities and Saat Moderate

Assuming the 90 days horizon Government Securities Fund is expected to generate 0.83 times more return on investment than Saat Moderate. However, Government Securities Fund is 1.21 times less risky than Saat Moderate. It trades about -0.28 of its potential returns per unit of risk. Saat Moderate Strategy is currently generating about -0.24 per unit of risk. If you would invest  883.00  in Government Securities Fund on September 25, 2024 and sell it today you would lose (12.00) from holding Government Securities Fund or give up 1.36% of portfolio value over 90 days.

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

Government Securities Fund  vs.  Saat Moderate Strategy

Government Securities

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Government Securities Fund has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong basic indicators, Government Securities is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Saat Moderate Strategy

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Saat Moderate Strategy has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong basic indicators, Saat Moderate is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Government Securities and Saat Moderate

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

The idea behind Government Securities Fund and Saat Moderate Strategy 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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.