Correlation Between Sachem Capital and SiriusPoint

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

By analyzing existing cross correlation between Sachem Capital Corp and SiriusPoint, you can compare the effects of market volatilities on Sachem Capital and SiriusPoint 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 Sachem Capital with a short position of SiriusPoint. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sachem Capital and SiriusPoint.

Diversification Opportunities for Sachem Capital and SiriusPoint

-0.08

Correlation Coefficient

Sachem Capital  SiriusPoint

Good diversification

The 3 months correlation between Sachem and SiriusPoint is -0.08. Overlapping area represents the amount of risk that can be diversified away by holding Sachem Capital Corp and SiriusPoint in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SiriusPoint and Sachem Capital 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 Sachem Capital Corp are associated (or correlated) with SiriusPoint. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SiriusPoint has no effect on the direction of Sachem Capital i.e., Sachem Capital and SiriusPoint go up and down completely randomly.

Pair Corralation between Sachem Capital and SiriusPoint

Assuming the 90 days trading horizon Sachem Capital Corp is expected to under-perform the SiriusPoint. In addition to that, Sachem Capital is 4.87 times more volatile than SiriusPoint. It trades about -0.06 of its total potential returns per unit of risk. SiriusPoint is currently generating about 0.21 per unit of volatility. If you would invest  2,469  in SiriusPoint on September 2, 2024 and sell it today you would earn a total of  103.00  from holding SiriusPoint or generate 4.17% return on investment over 90 days.

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

Sachem Capital Corp  vs.  SiriusPoint

Sachem Capital Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Sachem Capital Corp has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Sachem Capital is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

SiriusPoint

Risk-Adjusted Performance

16 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in SiriusPoint are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong fundamental drivers, SiriusPoint is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Sachem Capital and SiriusPoint

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

The idea behind Sachem Capital Corp and SiriusPoint 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 Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.