Correlation Between Solution Advanced and Sajo Seafood
Can any of the company-specific risk be diversified away by investing in both Solution Advanced and Sajo Seafood 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 Solution Advanced and Sajo Seafood into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Solution Advanced Technology and Sajo Seafood, you can compare the effects of market volatilities on Solution Advanced and Sajo Seafood 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 Solution Advanced with a short position of Sajo Seafood. Check out your portfolio center. Please also check ongoing floating volatility patterns of Solution Advanced and Sajo Seafood.
Diversification Opportunities for Solution Advanced and Sajo Seafood
0.7 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Solution and Sajo is 0.7. Overlapping area represents the amount of risk that can be diversified away by holding Solution Advanced Technology and Sajo Seafood in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sajo Seafood and Solution Advanced 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 Solution Advanced Technology are associated (or correlated) with Sajo Seafood. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sajo Seafood has no effect on the direction of Solution Advanced i.e., Solution Advanced and Sajo Seafood go up and down completely randomly.
Pair Corralation between Solution Advanced and Sajo Seafood
Assuming the 90 days trading horizon Solution Advanced Technology is expected to generate 2.74 times more return on investment than Sajo Seafood. However, Solution Advanced is 2.74 times more volatile than Sajo Seafood. It trades about 0.19 of its potential returns per unit of risk. Sajo Seafood is currently generating about -0.1 per unit of risk. If you would invest 161,600 in Solution Advanced Technology on December 2, 2024 and sell it today you would earn a total of 63,400 from holding Solution Advanced Technology or generate 39.23% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Solution Advanced Technology vs. Sajo Seafood
Performance |
| Timeline |
| Solution Advanced |
| Sajo Seafood |
Solution Advanced and Sajo Seafood Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Solution Advanced and Sajo Seafood
The main advantage of trading using opposite Solution Advanced and Sajo Seafood positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Solution Advanced position performs unexpectedly, Sajo Seafood 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 Sajo Seafood will offset losses from the drop in Sajo Seafood's long position.| Solution Advanced vs. Samsung Electronics Co | ||
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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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.
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