Correlation Between Simt Large and Saat E

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

By analyzing existing cross correlation between Simt Large Cap and Saat E Market, you can compare the effects of market volatilities on Simt Large and Saat E 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 Simt Large with a short position of Saat E. Check out your portfolio center. Please also check ongoing floating volatility patterns of Simt Large and Saat E.

Diversification Opportunities for Simt Large and Saat E

0.8

Correlation Coefficient

Simt Large  Saat E

Very poor diversification

The 3 months correlation between Simt and Saat is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding Simt Large Cap and Saat E Market in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Saat E Market and Simt Large 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 Simt Large Cap are associated (or correlated) with Saat E. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Saat E Market has no effect on the direction of Simt Large i.e., Simt Large and Saat E go up and down completely randomly.

Pair Corralation between Simt Large and Saat E

Assuming the 90 days horizon Simt Large Cap is expected to generate 1.67 times more return on investment than Saat E. However, Simt Large is 1.67 times more volatile than Saat E Market. It trades about 0.05 of its potential returns per unit of risk. Saat E Market is currently generating about 0.03 per unit of risk. If you would invest  3,325  in Simt Large Cap on September 20, 2024 and sell it today you would earn a total of  1,033  from holding Simt Large Cap or generate 31.07% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	99.8%
Values	Daily Returns

Simt Large Cap  vs.  Saat E Market

Simt Large Cap

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Simt Large Cap has generated negative risk-adjusted returns adding no value to fund investors. In spite of latest weak performance, the Fund's 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 E Market

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Simt Large and Saat E

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

The idea behind Simt Large Cap and Saat E Market 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 Portfolio Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.