Correlation Between CALTAGIRONE EDITORE and Sims Metal

Can any of the company-specific risk be diversified away by investing in both CALTAGIRONE EDITORE and Sims Metal 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 CALTAGIRONE EDITORE and Sims Metal into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between CALTAGIRONE EDITORE and Sims Metal Management, you can compare the effects of market volatilities on CALTAGIRONE EDITORE and Sims Metal 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 CALTAGIRONE EDITORE with a short position of Sims Metal. Check out your portfolio center. Please also check ongoing floating volatility patterns of CALTAGIRONE EDITORE and Sims Metal.

Diversification Opportunities for CALTAGIRONE EDITORE and Sims Metal

0.4

Correlation Coefficient

CALTAGIRONE EDITORE  Sims Metal

Very weak diversification

The 3 months correlation between CALTAGIRONE and Sims is 0.4. Overlapping area represents the amount of risk that can be diversified away by holding CALTAGIRONE EDITORE and Sims Metal Management in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sims Metal Management and CALTAGIRONE EDITORE 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 CALTAGIRONE EDITORE are associated (or correlated) with Sims Metal. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sims Metal Management has no effect on the direction of CALTAGIRONE EDITORE i.e., CALTAGIRONE EDITORE and Sims Metal go up and down completely randomly.

Pair Corralation between CALTAGIRONE EDITORE and Sims Metal

Assuming the 90 days trading horizon CALTAGIRONE EDITORE is expected to under-perform the Sims Metal. But the stock apears to be less risky and, when comparing its historical volatility, CALTAGIRONE EDITORE is 1.36 times less risky than Sims Metal. The stock trades about 0.0 of its potential returns per unit of risk. The Sims Metal Management is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest  870.00  in Sims Metal Management on March 20, 2025 and sell it today you would lose (5.00) from holding Sims Metal Management or give up 0.57% of portfolio value over 90 days.

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

CALTAGIRONE EDITORE  vs.  Sims Metal Management

CALTAGIRONE EDITORE

Risk-Adjusted Performance

Very Weak

Over the last 90 days CALTAGIRONE EDITORE has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, CALTAGIRONE EDITORE is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Sims Metal Management

Risk-Adjusted Performance

Very Weak

Over the last 90 days Sims Metal Management has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Sims Metal is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with CALTAGIRONE EDITORE and Sims Metal

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

The idea behind CALTAGIRONE EDITORE and Sims Metal Management 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 Portfolio Center module to all portfolio management and optimization tools to improve performance of your portfolios.