Correlation Between SFL and Adelaide Brighton
Can any of the company-specific risk be diversified away by investing in both SFL and Adelaide Brighton 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 SFL and Adelaide Brighton into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between SFL Corporation and Adelaide Brighton, you can compare the effects of market volatilities on SFL and Adelaide Brighton 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 SFL with a short position of Adelaide Brighton. Check out your portfolio center. Please also check ongoing floating volatility patterns of SFL and Adelaide Brighton.
Diversification Opportunities for SFL and Adelaide Brighton
0.12 | Correlation Coefficient |
Average diversification
The 3 months correlation between SFL and Adelaide is 0.12. Overlapping area represents the amount of risk that can be diversified away by holding SFL Corp. and Adelaide Brighton in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Adelaide Brighton and SFL 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 SFL Corporation are associated (or correlated) with Adelaide Brighton. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Adelaide Brighton has no effect on the direction of SFL i.e., SFL and Adelaide Brighton go up and down completely randomly.
Pair Corralation between SFL and Adelaide Brighton
Considering the 90-day investment horizon SFL is expected to generate 185.68 times less return on investment than Adelaide Brighton. But when comparing it to its historical volatility, SFL Corporation is 51.07 times less risky than Adelaide Brighton. It trades about 0.02 of its potential returns per unit of risk. Adelaide Brighton is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest 544.00 in Adelaide Brighton on September 4, 2024 and sell it today you would lose (543.90) from holding Adelaide Brighton or give up 99.98% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 57.09% |
| Values | Daily Returns |
SFL Corp. vs. Adelaide Brighton
Performance |
| Timeline |
| SFL Corporation |
| Adelaide Brighton |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
SFL and Adelaide Brighton Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SFL and Adelaide Brighton
The main advantage of trading using opposite SFL and Adelaide Brighton positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SFL position performs unexpectedly, Adelaide Brighton 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 Adelaide Brighton will offset losses from the drop in Adelaide Brighton's long position.The idea behind SFL Corporation and Adelaide Brighton 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.| Adelaide Brighton vs. Delek Drilling | Adelaide Brighton vs. Codexis | Adelaide Brighton vs. The Mosaic | Adelaide Brighton vs. Ecovyst |
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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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