Correlation Between Chemtrade Logistics and Sabio Holdings

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

By analyzing existing cross correlation between Chemtrade Logistics Income and Sabio Holdings, you can compare the effects of market volatilities on Chemtrade Logistics and Sabio Holdings 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 Chemtrade Logistics with a short position of Sabio Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of Chemtrade Logistics and Sabio Holdings.

Diversification Opportunities for Chemtrade Logistics and Sabio Holdings

0.17

Correlation Coefficient

Chemtrade Logistics  Sabio Holdings

Average diversification

The 3 months correlation between Chemtrade and Sabio is 0.17. Overlapping area represents the amount of risk that can be diversified away by holding Chemtrade Logistics Income and Sabio Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sabio Holdings and Chemtrade Logistics 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 Chemtrade Logistics Income are associated (or correlated) with Sabio Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sabio Holdings has no effect on the direction of Chemtrade Logistics i.e., Chemtrade Logistics and Sabio Holdings go up and down completely randomly.

Pair Corralation between Chemtrade Logistics and Sabio Holdings

Assuming the 90 days trading horizon Chemtrade Logistics Income is expected to generate 0.41 times more return on investment than Sabio Holdings. However, Chemtrade Logistics Income is 2.45 times less risky than Sabio Holdings. It trades about -0.16 of its potential returns per unit of risk. Sabio Holdings is currently generating about -0.25 per unit of risk. If you would invest  1,144  in Chemtrade Logistics Income on September 20, 2024 and sell it today you would lose (63.00) from holding Chemtrade Logistics Income or give up 5.51% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	95.65%
Values	Daily Returns

Chemtrade Logistics Income  vs.  Sabio Holdings

Chemtrade Logistics

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Chemtrade Logistics Income are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong technical and fundamental indicators, Chemtrade Logistics is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.

Sabio Holdings

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Sabio Holdings are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal forward indicators, Sabio Holdings may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Chemtrade Logistics and Sabio Holdings

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

The idea behind Chemtrade Logistics Income and Sabio Holdings 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..