Correlation Between Sparta Capital and Saipem SpA

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

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

Diversification Opportunities for Sparta Capital and Saipem SpA

-0.82

Correlation Coefficient

Sparta Capital  Saipem SpA

Pay attention - limited upside

The 3 months correlation between Sparta and Saipem is -0.82. Overlapping area represents the amount of risk that can be diversified away by holding Sparta Capital and Saipem SpA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Saipem SpA and Sparta 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 Sparta Capital are associated (or correlated) with Saipem SpA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Saipem SpA has no effect on the direction of Sparta Capital i.e., Sparta Capital and Saipem SpA go up and down completely randomly.

Pair Corralation between Sparta Capital and Saipem SpA

Assuming the 90 days horizon Sparta Capital is expected to under-perform the Saipem SpA. In addition to that, Sparta Capital is 1.22 times more volatile than Saipem SpA. It trades about -0.12 of its total potential returns per unit of risk. Saipem SpA is currently generating about 0.18 per unit of volatility. If you would invest  198.00  in Saipem SpA on September 16, 2024 and sell it today you would earn a total of  58.00  from holding Saipem SpA or generate 29.29% return on investment over 90 days.

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

Sparta Capital  vs.  Saipem SpA

Sparta Capital

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Sparta Capital has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Saipem SpA

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Saipem SpA are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. Despite nearly inconsistent primary indicators, Saipem SpA reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Sparta Capital and Saipem SpA

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

The idea behind Sparta Capital and Saipem SpA 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.

Check out your portfolio center.

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..