Correlation Between Laureate Education and SIMS METAL
Can any of the company-specific risk be diversified away by investing in both Laureate Education 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 Laureate Education and SIMS METAL into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Laureate Education and SIMS METAL MGT, you can compare the effects of market volatilities on Laureate Education 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 Laureate Education with a short position of SIMS METAL. Check out your portfolio center. Please also check ongoing floating volatility patterns of Laureate Education and SIMS METAL.
Diversification Opportunities for Laureate Education and SIMS METAL
0.48 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Laureate and SIMS is 0.48. Overlapping area represents the amount of risk that can be diversified away by holding Laureate Education and SIMS METAL MGT in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SIMS METAL MGT and Laureate Education 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 Laureate Education 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 MGT has no effect on the direction of Laureate Education i.e., Laureate Education and SIMS METAL go up and down completely randomly.
Pair Corralation between Laureate Education and SIMS METAL
Assuming the 90 days trading horizon Laureate Education is expected to generate 0.94 times more return on investment than SIMS METAL. However, Laureate Education is 1.06 times less risky than SIMS METAL. It trades about 0.28 of its potential returns per unit of risk. SIMS METAL MGT is currently generating about 0.09 per unit of risk. If you would invest 1,530 in Laureate Education on September 3, 2024 and sell it today you would earn a total of 250.00 from holding Laureate Education or generate 16.34% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Laureate Education vs. SIMS METAL MGT
Performance |
| Timeline |
| Laureate Education |
| SIMS METAL MGT |
Laureate Education and SIMS METAL Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Laureate Education and SIMS METAL
The main advantage of trading using opposite Laureate Education and SIMS METAL positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Laureate Education 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.| Laureate Education vs. SENECA FOODS A | Laureate Education vs. PT Global Mediacom | Laureate Education vs. PREMIER FOODS | Laureate Education vs. United Natural Foods |
| SIMS METAL vs. JAPAN AIRLINES | SIMS METAL vs. ARDAGH METAL PACDL 0001 | SIMS METAL vs. GREENX METALS LTD | SIMS METAL vs. Ming Le Sports |
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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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