Correlation Between Stratim Cloud and Sound Point
Can any of the company-specific risk be diversified away by investing in both Stratim Cloud and Sound Point 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 Stratim Cloud and Sound Point into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Stratim Cloud Acquisition and Sound Point Acquisition, you can compare the effects of market volatilities on Stratim Cloud and Sound Point 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 Stratim Cloud with a short position of Sound Point. Check out your portfolio center. Please also check ongoing floating volatility patterns of Stratim Cloud and Sound Point.
Diversification Opportunities for Stratim Cloud and Sound Point
0.05 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Stratim and Sound is 0.05. Overlapping area represents the amount of risk that can be diversified away by holding Stratim Cloud Acquisition and Sound Point Acquisition in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sound Point Acquisition and Stratim Cloud 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 Stratim Cloud Acquisition are associated (or correlated) with Sound Point. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sound Point Acquisition has no effect on the direction of Stratim Cloud i.e., Stratim Cloud and Sound Point go up and down completely randomly.
Pair Corralation between Stratim Cloud and Sound Point
Assuming the 90 days horizon Stratim Cloud Acquisition is expected to generate 1.05 times more return on investment than Sound Point. However, Stratim Cloud is 1.05 times more volatile than Sound Point Acquisition. It trades about 0.14 of its potential returns per unit of risk. Sound Point Acquisition is currently generating about 0.07 per unit of risk. If you would invest 3.52 in Stratim Cloud Acquisition on August 29, 2024 and sell it today you would lose (3.33) from holding Stratim Cloud Acquisition or give up 94.6% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 75.26% |
| Values | Daily Returns |
Stratim Cloud Acquisition vs. Sound Point Acquisition
Performance |
| Timeline |
| Stratim Cloud Acquisition |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
| Sound Point Acquisition |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Stratim Cloud and Sound Point Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Stratim Cloud and Sound Point
The main advantage of trading using opposite Stratim Cloud and Sound Point positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Stratim Cloud position performs unexpectedly, Sound Point 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 Sound Point will offset losses from the drop in Sound Point's long position.The idea behind Stratim Cloud Acquisition and Sound Point Acquisition 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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.
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