Correlation Between SNM Gobal and Sparta Capital

Can any of the company-specific risk be diversified away by investing in both SNM Gobal and Sparta Capital 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 SNM Gobal and Sparta Capital into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between SNM Gobal Holdings and Sparta Capital, you can compare the effects of market volatilities on SNM Gobal and Sparta Capital 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 SNM Gobal with a short position of Sparta Capital. Check out your portfolio center. Please also check ongoing floating volatility patterns of SNM Gobal and Sparta Capital.

Diversification Opportunities for SNM Gobal and Sparta Capital

-0.24

Correlation Coefficient

SNM Gobal  Sparta Capital

Very good diversification

The 3 months correlation between SNM and Sparta is -0.24. Overlapping area represents the amount of risk that can be diversified away by holding SNM Gobal Holdings and Sparta Capital in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sparta Capital and SNM Gobal 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 SNM Gobal Holdings are associated (or correlated) with Sparta Capital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sparta Capital has no effect on the direction of SNM Gobal i.e., SNM Gobal and Sparta Capital go up and down completely randomly.

Pair Corralation between SNM Gobal and Sparta Capital

If you would invest  1.21  in Sparta Capital on March 19, 2024 and sell it today you would earn a total of  0.75  from holding Sparta Capital or generate 61.98% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

SNM Gobal Holdings  vs.  Sparta Capital

SNM Gobal Holdings

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days SNM Gobal Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy primary indicators, SNM Gobal is not utilizing all of its potentials. The current stock price disarray, may contribute to short-term losses for the investors.

Sparta Capital

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Sparta Capital are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite nearly weak basic indicators, Sparta Capital reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with SNM Gobal and Sparta Capital

The main advantage of trading using opposite SNM Gobal and Sparta Capital positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SNM Gobal position performs unexpectedly, Sparta Capital 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 Sparta Capital will offset losses from the drop in Sparta Capital's long position.

The idea behind SNM Gobal Holdings and Sparta Capital 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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.