Correlation Between USWE SPORTS and Sims Metal
Can any of the company-specific risk be diversified away by investing in both USWE SPORTS and Sims Metal 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 USWE SPORTS and Sims Metal into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between USWE SPORTS AB and Sims Metal Management, you can compare the effects of market volatilities on USWE SPORTS and Sims Metal 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 USWE SPORTS with a short position of Sims Metal. Check out your portfolio center. Please also check ongoing floating volatility patterns of USWE SPORTS and Sims Metal.
Diversification Opportunities for USWE SPORTS and Sims Metal
0.39 | Correlation Coefficient |
Weak diversification
The 3 months correlation between USWE and Sims is 0.39. Overlapping area represents the amount of risk that can be diversified away by holding USWE SPORTS AB and Sims Metal Management in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sims Metal Management and USWE SPORTS 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 USWE SPORTS AB are associated (or correlated) with Sims Metal. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sims Metal Management has no effect on the direction of USWE SPORTS i.e., USWE SPORTS and Sims Metal go up and down completely randomly.
Pair Corralation between USWE SPORTS and Sims Metal
Assuming the 90 days horizon USWE SPORTS AB is expected to generate 1.92 times more return on investment than Sims Metal. However, USWE SPORTS is 1.92 times more volatile than Sims Metal Management. It trades about 0.27 of its potential returns per unit of risk. Sims Metal Management is currently generating about 0.06 per unit of risk. If you would invest 59.00 in USWE SPORTS AB on August 31, 2024 and sell it today you would earn a total of 17.00 from holding USWE SPORTS AB or generate 28.81% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
USWE SPORTS AB vs. Sims Metal Management
Performance |
| Timeline |
| USWE SPORTS AB |
| Sims Metal Management |
USWE SPORTS and Sims Metal Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with USWE SPORTS and Sims Metal
The main advantage of trading using opposite USWE SPORTS and Sims Metal positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if USWE SPORTS position performs unexpectedly, Sims Metal 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 Sims Metal will offset losses from the drop in Sims Metal's long position.| USWE SPORTS vs. Li Ning Company | USWE SPORTS vs. Trip Group Limited | USWE SPORTS vs. Superior Plus Corp | USWE SPORTS vs. NMI Holdings |
| Sims Metal vs. SALESFORCE INC CDR | Sims Metal vs. CARSALESCOM | Sims Metal vs. ADRIATIC METALS LS 013355 | Sims Metal vs. AAC TECHNOLOGHLDGADR |
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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.
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