Correlation Between Sella Real and IES Holdings

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

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

Diversification Opportunities for Sella Real and IES Holdings

0.95

Correlation Coefficient

Sella Real  IES Holdings

Almost no diversification

The 3 months correlation between Sella and IES is 0.95. Overlapping area represents the amount of risk that can be diversified away by holding Sella Real Estate and IES Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on IES Holdings and Sella Real 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 Sella Real Estate are associated (or correlated) with IES Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of IES Holdings has no effect on the direction of Sella Real i.e., Sella Real and IES Holdings go up and down completely randomly.

Pair Corralation between Sella Real and IES Holdings

Assuming the 90 days trading horizon Sella Real Estate is expected to generate 0.89 times more return on investment than IES Holdings. However, Sella Real Estate is 1.12 times less risky than IES Holdings. It trades about 0.04 of its potential returns per unit of risk. IES Holdings is currently generating about 0.02 per unit of risk. If you would invest  71,827  in Sella Real Estate on September 29, 2024 and sell it today you would earn a total of  22,173  from holding Sella Real Estate or generate 30.87% return on investment over 90 days.

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

Sella Real Estate  vs.  IES Holdings

Sella Real Estate

Risk-Adjusted Performance

30 of 100

Strong

Compared to the overall equity markets, risk-adjusted returns on investments in Sella Real Estate are ranked lower than 30 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak basic indicators, Sella Real unveiled solid returns over the last few months and may actually be approaching a breakup point.

IES Holdings

Risk-Adjusted Performance

20 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in IES Holdings are ranked lower than 20 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, IES Holdings sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Sella Real and IES Holdings

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

The idea behind Sella Real Estate and IES Holdings 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 CEOs Directory module to screen CEOs from public companies around the world.