Correlation Between Materials Portfolio and Saat Moderate

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

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

Diversification Opportunities for Materials Portfolio and Saat Moderate

0.49

Correlation Coefficient

Materials Portfolio  Saat Moderate

Very weak diversification

The 3 months correlation between Materials and Saat is 0.49. Overlapping area represents the amount of risk that can be diversified away by holding Materials Portfolio Fidelity 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 Materials Portfolio 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 Materials Portfolio Fidelity 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 Materials Portfolio i.e., Materials Portfolio and Saat Moderate go up and down completely randomly.

Pair Corralation between Materials Portfolio and Saat Moderate

Assuming the 90 days horizon Materials Portfolio Fidelity is expected to under-perform the Saat Moderate. In addition to that, Materials Portfolio is 2.98 times more volatile than Saat Moderate Strategy. It trades about -0.43 of its total potential returns per unit of risk. Saat Moderate Strategy is currently generating about -0.1 per unit of volatility. If you would invest  1,176  in Saat Moderate Strategy on September 21, 2024 and sell it today you would lose (8.00) from holding Saat Moderate Strategy or give up 0.68% of portfolio value over 90 days.

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

Materials Portfolio Fidelity  vs.  Saat Moderate Strategy

Materials Portfolio

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Materials Portfolio Fidelity has generated negative risk-adjusted returns adding no value to fund investors. In spite of latest weak performance, the Fund's technical and fundamental indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the fund 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 Materials Portfolio and Saat Moderate

The main advantage of trading using opposite Materials Portfolio and Saat Moderate positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Materials Portfolio 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 Materials Portfolio Fidelity 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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.