Correlation Between SAG Holdings and Magna International
Can any of the company-specific risk be diversified away by investing in both SAG Holdings and Magna International 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 SAG Holdings and Magna International into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between SAG Holdings Limited and Magna International, you can compare the effects of market volatilities on SAG Holdings and Magna International 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 SAG Holdings with a short position of Magna International. Check out your portfolio center. Please also check ongoing floating volatility patterns of SAG Holdings and Magna International.
Diversification Opportunities for SAG Holdings and Magna International
0.06 | Correlation Coefficient |
Significant diversification
The 3 months correlation between SAG and Magna is 0.06. Overlapping area represents the amount of risk that can be diversified away by holding SAG Holdings Limited and Magna International in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Magna International and SAG Holdings 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 SAG Holdings Limited are associated (or correlated) with Magna International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Magna International has no effect on the direction of SAG Holdings i.e., SAG Holdings and Magna International go up and down completely randomly.
Pair Corralation between SAG Holdings and Magna International
Considering the 90-day investment horizon SAG Holdings Limited is expected to under-perform the Magna International. In addition to that, SAG Holdings is 3.55 times more volatile than Magna International. It trades about -0.45 of its total potential returns per unit of risk. Magna International is currently generating about 0.14 per unit of volatility. If you would invest 4,145 in Magna International on August 23, 2024 and sell it today you would earn a total of 269.00 from holding Magna International or generate 6.49% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 95.65% |
| Values | Daily Returns |
SAG Holdings Limited vs. Magna International
Performance |
| Timeline |
| SAG Holdings Limited |
| Magna International |
SAG Holdings and Magna International Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SAG Holdings and Magna International
The main advantage of trading using opposite SAG Holdings and Magna International positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SAG Holdings position performs unexpectedly, Magna International 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 Magna International will offset losses from the drop in Magna International's long position.| SAG Holdings vs. FTAI Infrastructure | SAG Holdings vs. Synnex | SAG Holdings vs. Universal Security Instruments | SAG Holdings vs. WESCO International |
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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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.
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