Correlation Between SIVERS SEMICONDUCTORS and Sotherly Hotels
Can any of the company-specific risk be diversified away by investing in both SIVERS SEMICONDUCTORS and Sotherly Hotels 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 SIVERS SEMICONDUCTORS and Sotherly Hotels into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between SIVERS SEMICONDUCTORS AB and Sotherly Hotels, you can compare the effects of market volatilities on SIVERS SEMICONDUCTORS and Sotherly Hotels 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 SIVERS SEMICONDUCTORS with a short position of Sotherly Hotels. Check out your portfolio center. Please also check ongoing floating volatility patterns of SIVERS SEMICONDUCTORS and Sotherly Hotels.
Diversification Opportunities for SIVERS SEMICONDUCTORS and Sotherly Hotels
0.45 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between SIVERS and Sotherly is 0.45. Overlapping area represents the amount of risk that can be diversified away by holding SIVERS SEMICONDUCTORS AB and Sotherly Hotels in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sotherly Hotels and SIVERS SEMICONDUCTORS 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 SIVERS SEMICONDUCTORS AB are associated (or correlated) with Sotherly Hotels. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sotherly Hotels has no effect on the direction of SIVERS SEMICONDUCTORS i.e., SIVERS SEMICONDUCTORS and Sotherly Hotels go up and down completely randomly.
Pair Corralation between SIVERS SEMICONDUCTORS and Sotherly Hotels
Assuming the 90 days horizon SIVERS SEMICONDUCTORS AB is expected to generate 1.95 times more return on investment than Sotherly Hotels. However, SIVERS SEMICONDUCTORS is 1.95 times more volatile than Sotherly Hotels. It trades about -0.06 of its potential returns per unit of risk. Sotherly Hotels is currently generating about -0.15 per unit of risk. If you would invest 32.00 in SIVERS SEMICONDUCTORS AB on September 1, 2024 and sell it today you would lose (10.00) from holding SIVERS SEMICONDUCTORS AB or give up 31.25% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
SIVERS SEMICONDUCTORS AB vs. Sotherly Hotels
Performance |
| Timeline |
| SIVERS SEMICONDUCTORS |
| Sotherly Hotels |
SIVERS SEMICONDUCTORS and Sotherly Hotels Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SIVERS SEMICONDUCTORS and Sotherly Hotels
The main advantage of trading using opposite SIVERS SEMICONDUCTORS and Sotherly Hotels positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SIVERS SEMICONDUCTORS position performs unexpectedly, Sotherly Hotels 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 Sotherly Hotels will offset losses from the drop in Sotherly Hotels' long position.The idea behind SIVERS SEMICONDUCTORS AB and Sotherly Hotels 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.| Sotherly Hotels vs. Superior Plus Corp | Sotherly Hotels vs. NMI Holdings | Sotherly Hotels vs. Origin Agritech | Sotherly Hotels vs. SIVERS SEMICONDUCTORS AB |
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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.
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