Correlation Between Ternium SA and Sapiens International
Can any of the company-specific risk be diversified away by investing in both Ternium SA and Sapiens 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 Ternium SA and Sapiens International into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ternium SA ADR and Sapiens International, you can compare the effects of market volatilities on Ternium SA and Sapiens 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 Ternium SA with a short position of Sapiens International. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ternium SA and Sapiens International.
Diversification Opportunities for Ternium SA and Sapiens International
0.81 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Ternium and Sapiens is 0.81. Overlapping area represents the amount of risk that can be diversified away by holding Ternium SA ADR and Sapiens International in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sapiens International and Ternium SA 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 Ternium SA ADR are associated (or correlated) with Sapiens International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sapiens International has no effect on the direction of Ternium SA i.e., Ternium SA and Sapiens International go up and down completely randomly.
Pair Corralation between Ternium SA and Sapiens International
Allowing for the 90-day total investment horizon Ternium SA is expected to generate 6.23 times less return on investment than Sapiens International. But when comparing it to its historical volatility, Ternium SA ADR is 1.17 times less risky than Sapiens International. It trades about 0.02 of its potential returns per unit of risk. Sapiens International is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest 728,757 in Sapiens International on January 26, 2024 and sell it today you would earn a total of 440,243 from holding Sapiens International or generate 60.41% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 80.65% |
| Values | Daily Returns |
Ternium SA ADR vs. Sapiens International
Performance |
| Timeline |
| Ternium SA ADR |
| Sapiens International |
Ternium SA and Sapiens International Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ternium SA and Sapiens International
The main advantage of trading using opposite Ternium SA and Sapiens International positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ternium SA position performs unexpectedly, Sapiens 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 Sapiens International will offset losses from the drop in Sapiens International's long position.| Ternium SA vs. POSCO Holdings | Ternium SA vs. Steel Dynamics | Ternium SA vs. Gerdau SA ADR | Ternium SA vs. Nucor Corp |
| Sapiens International vs. Nice | Sapiens International vs. Tower Semiconductor | Sapiens International vs. Opko Health | Sapiens International vs. Elbit Systems |
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 Stocks Directory module to find actively traded stocks across global markets.
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