Correlation Between SVELEV and Black Hills

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

By analyzing existing cross correlation between SVELEV 25 10 FEB 41 and Black Hills, you can compare the effects of market volatilities on SVELEV and Black Hills 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 SVELEV with a short position of Black Hills. Check out your portfolio center. Please also check ongoing floating volatility patterns of SVELEV and Black Hills.

Diversification Opportunities for SVELEV and Black Hills

0.01

Correlation Coefficient

SVELEV  Black Hills

Significant diversification

The 3 months correlation between SVELEV and Black is 0.01. Overlapping area represents the amount of risk that can be diversified away by holding SVELEV 25 10 FEB 41 and Black Hills in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Black Hills and SVELEV 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 SVELEV 25 10 FEB 41 are associated (or correlated) with Black Hills. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Black Hills has no effect on the direction of SVELEV i.e., SVELEV and Black Hills go up and down completely randomly.

Pair Corralation between SVELEV and Black Hills

Assuming the 90 days trading horizon SVELEV 25 10 FEB 41 is expected to generate 0.97 times more return on investment than Black Hills. However, SVELEV 25 10 FEB 41 is 1.03 times less risky than Black Hills. It trades about 0.15 of its potential returns per unit of risk. Black Hills is currently generating about 0.06 per unit of risk. If you would invest  6,456  in SVELEV 25 10 FEB 41 on December 30, 2024 and sell it today you would earn a total of  470.00  from holding SVELEV 25 10 FEB 41 or generate 7.28% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	62.9%
Values	Daily Returns

SVELEV 25 10 FEB 41  vs.  Black Hills

SVELEV 25 10

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in SVELEV 25 10 FEB 41 are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Despite somewhat unfluctuating basic indicators, SVELEV may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Black Hills

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Black Hills are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite fairly strong forward-looking signals, Black Hills is not utilizing all of its potentials. The latest stock price confusion, may contribute to short-horizon losses for the traders.

Pair Trading with SVELEV and Black Hills

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

The idea behind SVELEV 25 10 FEB 41 and Black Hills 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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .