Correlation Between Santech Holdings and Fidus Investment

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

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

Diversification Opportunities for Santech Holdings and Fidus Investment

0.31

Correlation Coefficient

Santech Holdings  Fidus Investment

Weak diversification

The 3 months correlation between Santech and Fidus is 0.31. Overlapping area represents the amount of risk that can be diversified away by holding Santech Holdings Limited and Fidus Investment Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fidus Investment Corp and Santech Holdings 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 Santech Holdings Limited are associated (or correlated) with Fidus Investment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fidus Investment Corp has no effect on the direction of Santech Holdings i.e., Santech Holdings and Fidus Investment go up and down completely randomly.

Pair Corralation between Santech Holdings and Fidus Investment

Given the investment horizon of 90 days Santech Holdings Limited is expected to generate 105.64 times more return on investment than Fidus Investment. However, Santech Holdings is 105.64 times more volatile than Fidus Investment Corp. It trades about 0.11 of its potential returns per unit of risk. Fidus Investment Corp is currently generating about 0.15 per unit of risk. If you would invest  52.00  in Santech Holdings Limited on August 30, 2024 and sell it today you would earn a total of  44.00  from holding Santech Holdings Limited or generate 84.62% return on investment over 90 days.

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

Santech Holdings Limited  vs.  Fidus Investment Corp

Santech Holdings

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Santech Holdings Limited are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of rather weak technical and fundamental indicators, Santech Holdings exhibited solid returns over the last few months and may actually be approaching a breakup point.

Fidus Investment Corp

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Fidus Investment Corp are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak basic indicators, Fidus Investment may actually be approaching a critical reversion point that can send shares even higher in December 2024.

Pair Trading with Santech Holdings and Fidus Investment

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

The idea behind Santech Holdings Limited and Fidus Investment Corp 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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.