Correlation Between Sims and 88 Energy

Can any of the company-specific risk be diversified away by investing in both Sims and 88 Energy 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 Sims and 88 Energy into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Sims and 88 Energy, you can compare the effects of market volatilities on Sims and 88 Energy 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 Sims with a short position of 88 Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sims and 88 Energy.

Diversification Opportunities for Sims and 88 Energy

-0.06

Correlation Coefficient

Sims  88 Energy

Good diversification

The 3 months correlation between Sims and 88E is -0.06. Overlapping area represents the amount of risk that can be diversified away by holding Sims and 88 Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on 88 Energy and Sims 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 Sims are associated (or correlated) with 88 Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of 88 Energy has no effect on the direction of Sims i.e., Sims and 88 Energy go up and down completely randomly.

Pair Corralation between Sims and 88 Energy

Assuming the 90 days trading horizon Sims is expected to generate 19.77 times less return on investment than 88 Energy. But when comparing it to its historical volatility, Sims is 12.23 times less risky than 88 Energy. It trades about 0.07 of its potential returns per unit of risk. 88 Energy is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest  0.30  in 88 Energy on September 13, 2024 and sell it today you would lose (0.10) from holding 88 Energy or give up 33.33% of portfolio value over 90 days.

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

Sims  vs.  88 Energy

Sims

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Sims are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain primary indicators, Sims unveiled solid returns over the last few months and may actually be approaching a breakup point.

88 Energy

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in 88 Energy are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak technical and fundamental indicators, 88 Energy unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Sims and 88 Energy

The main advantage of trading using opposite Sims and 88 Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sims position performs unexpectedly, 88 Energy 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 88 Energy will offset losses from the drop in 88 Energy's long position.

The idea behind Sims and 88 Energy 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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.