Correlation Between SAG Holdings and Modine Manufacturing
Can any of the company-specific risk be diversified away by investing in both SAG Holdings and Modine Manufacturing 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 Modine Manufacturing 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 Modine Manufacturing, you can compare the effects of market volatilities on SAG Holdings and Modine Manufacturing 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 Modine Manufacturing. Check out your portfolio center. Please also check ongoing floating volatility patterns of SAG Holdings and Modine Manufacturing.
Diversification Opportunities for SAG Holdings and Modine Manufacturing
0.05 | Correlation Coefficient |
Significant diversification
The 3 months correlation between SAG and Modine is 0.05. Overlapping area represents the amount of risk that can be diversified away by holding SAG Holdings Limited and Modine Manufacturing in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Modine Manufacturing 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 Modine Manufacturing. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Modine Manufacturing has no effect on the direction of SAG Holdings i.e., SAG Holdings and Modine Manufacturing go up and down completely randomly.
Pair Corralation between SAG Holdings and Modine Manufacturing
Considering the 90-day investment horizon SAG Holdings Limited is expected to under-perform the Modine Manufacturing. In addition to that, SAG Holdings is 2.05 times more volatile than Modine Manufacturing. It trades about -0.42 of its total potential returns per unit of risk. Modine Manufacturing is currently generating about 0.13 per unit of volatility. If you would invest 4,920 in Modine Manufacturing on August 26, 2024 and sell it today you would earn a total of 9,402 from holding Modine Manufacturing or generate 191.1% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 9.64% |
| Values | Daily Returns |
SAG Holdings Limited vs. Modine Manufacturing
Performance |
| Timeline |
| SAG Holdings Limited |
| Modine Manufacturing |
SAG Holdings and Modine Manufacturing Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SAG Holdings and Modine Manufacturing
The main advantage of trading using opposite SAG Holdings and Modine Manufacturing positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SAG Holdings position performs unexpectedly, Modine Manufacturing 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 Modine Manufacturing will offset losses from the drop in Modine Manufacturing's long position.| SAG Holdings vs. Ingram Micro Holding | SAG Holdings vs. Hewlett Packard Enterprise | SAG Holdings vs. Global Partners LP | SAG Holdings vs. WESCO International |
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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.
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