Correlation Between Salomon A and Sano Brunos

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

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

Diversification Opportunities for Salomon A and Sano Brunos

0.39

Correlation Coefficient

Salomon A  Sano Brunos

Weak diversification

The 3 months correlation between Salomon and Sano is 0.39. Overlapping area represents the amount of risk that can be diversified away by holding Salomon A Angel and Sano Brunos Enterprises in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sano Brunos Enterprises and Salomon A 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 Salomon A Angel are associated (or correlated) with Sano Brunos. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sano Brunos Enterprises has no effect on the direction of Salomon A i.e., Salomon A and Sano Brunos go up and down completely randomly.

Pair Corralation between Salomon A and Sano Brunos

Assuming the 90 days trading horizon Salomon A Angel is expected to generate 2.26 times more return on investment than Sano Brunos. However, Salomon A is 2.26 times more volatile than Sano Brunos Enterprises. It trades about 0.17 of its potential returns per unit of risk. Sano Brunos Enterprises is currently generating about 0.33 per unit of risk. If you would invest  294,900  in Salomon A Angel on September 15, 2024 and sell it today you would earn a total of  70,200  from holding Salomon A Angel or generate 23.8% return on investment over 90 days.

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

Salomon A Angel  vs.  Sano Brunos Enterprises

Salomon A Angel

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Salomon A Angel are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Salomon A sustained solid returns over the last few months and may actually be approaching a breakup point.

Sano Brunos Enterprises

Risk-Adjusted Performance

26 of 100

Strong

Compared to the overall equity markets, risk-adjusted returns on investments in Sano Brunos Enterprises are ranked lower than 26 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak basic indicators, Sano Brunos unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Salomon A and Sano Brunos

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

The idea behind Salomon A Angel and Sano Brunos Enterprises 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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..