Correlation Between Sao Ta and Transimex Transportation
Can any of the company-specific risk be diversified away by investing in both Sao Ta and Transimex Transportation 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 Sao Ta and Transimex Transportation into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Sao Ta Foods and Transimex Transportation JSC, you can compare the effects of market volatilities on Sao Ta and Transimex Transportation 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 Sao Ta with a short position of Transimex Transportation. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sao Ta and Transimex Transportation.
Diversification Opportunities for Sao Ta and Transimex Transportation
0.13 | Correlation Coefficient |
Average diversification
The 3 months correlation between Sao and Transimex is 0.13. Overlapping area represents the amount of risk that can be diversified away by holding Sao Ta Foods and Transimex Transportation JSC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Transimex Transportation and Sao Ta 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 Sao Ta Foods are associated (or correlated) with Transimex Transportation. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Transimex Transportation has no effect on the direction of Sao Ta i.e., Sao Ta and Transimex Transportation go up and down completely randomly.
Pair Corralation between Sao Ta and Transimex Transportation
Assuming the 90 days trading horizon Sao Ta Foods is expected to generate 0.45 times more return on investment than Transimex Transportation. However, Sao Ta Foods is 2.25 times less risky than Transimex Transportation. It trades about 0.3 of its potential returns per unit of risk. Transimex Transportation JSC is currently generating about -0.01 per unit of risk. If you would invest 4,550,000 in Sao Ta Foods on September 4, 2024 and sell it today you would earn a total of 310,000 from holding Sao Ta Foods or generate 6.81% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 68.18% |
| Values | Daily Returns |
Sao Ta Foods vs. Transimex Transportation JSC
Performance |
| Timeline |
| Sao Ta Foods |
| Transimex Transportation |
Sao Ta and Transimex Transportation Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sao Ta and Transimex Transportation
The main advantage of trading using opposite Sao Ta and Transimex Transportation positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sao Ta position performs unexpectedly, Transimex Transportation 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 Transimex Transportation will offset losses from the drop in Transimex Transportation's long position.The idea behind Sao Ta Foods and Transimex Transportation JSC 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.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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.
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