Correlation Between Santos and Tremor International

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Can any of the company-specific risk be diversified away by investing in both Santos and Tremor 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 Santos and Tremor International into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Santos Ltd ADR and Tremor International, you can compare the effects of market volatilities on Santos and Tremor 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 Santos with a short position of Tremor International. Check out your portfolio center. Please also check ongoing floating volatility patterns of Santos and Tremor International.

Diversification Opportunities for Santos and Tremor International

0.68
  Correlation Coefficient

Poor diversification

The 3 months correlation between Santos and Tremor is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding Santos Ltd ADR and Tremor International in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tremor International and Santos 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 Santos Ltd ADR are associated (or correlated) with Tremor International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tremor International has no effect on the direction of Santos i.e., Santos and Tremor International go up and down completely randomly.

Pair Corralation between Santos and Tremor International

If you would invest  300.00  in Tremor International on September 1, 2024 and sell it today you would earn a total of  184.00  from holding Tremor International or generate 61.33% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthSignificant
Accuracy0.79%
ValuesDaily Returns

Santos Ltd ADR  vs.  Tremor International

 Performance 
       Timeline  
Santos Ltd ADR 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days Santos Ltd ADR has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong basic indicators, Santos is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.
Tremor International 

Risk-Adjusted Performance

11 of 100

 
Weak
 
Strong
Good
Compared to the overall equity markets, risk-adjusted returns on investments in Tremor International are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Despite nearly unsteady basic indicators, Tremor International reported solid returns over the last few months and may actually be approaching a breakup point.

Santos and Tremor International Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Santos and Tremor International

The main advantage of trading using opposite Santos and Tremor International positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Santos position performs unexpectedly, Tremor 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 Tremor International will offset losses from the drop in Tremor International's long position.
The idea behind Santos Ltd ADR and Tremor International 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.
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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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.

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