Correlation Between Interlife General and Sidma SA

Can any of the company-specific risk be diversified away by investing in both Interlife General and Sidma SA 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 Interlife General and Sidma SA into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Interlife General Insurance and Sidma SA Steel, you can compare the effects of market volatilities on Interlife General and Sidma SA 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 Interlife General with a short position of Sidma SA. Check out your portfolio center. Please also check ongoing floating volatility patterns of Interlife General and Sidma SA.

Diversification Opportunities for Interlife General and Sidma SA

-0.15

Correlation Coefficient

Interlife General  Sidma SA

Good diversification

The 3 months correlation between Interlife and Sidma is -0.15. Overlapping area represents the amount of risk that can be diversified away by holding Interlife General Insurance and Sidma SA Steel in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sidma SA Steel and Interlife General 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 Interlife General Insurance are associated (or correlated) with Sidma SA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sidma SA Steel has no effect on the direction of Interlife General i.e., Interlife General and Sidma SA go up and down completely randomly.

Pair Corralation between Interlife General and Sidma SA

Assuming the 90 days trading horizon Interlife General is expected to generate 1.0 times less return on investment than Sidma SA. But when comparing it to its historical volatility, Interlife General Insurance is 1.3 times less risky than Sidma SA. It trades about 0.06 of its potential returns per unit of risk. Sidma SA Steel is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest  137.00  in Sidma SA Steel on April 24, 2025 and sell it today you would earn a total of  6.00  from holding Sidma SA Steel or generate 4.38% return on investment over 90 days.

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

Interlife General Insurance  vs.  Sidma SA Steel

Interlife General

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Interlife General Insurance are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, Interlife General is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Sidma SA Steel

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Sidma SA Steel are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, Sidma SA is not utilizing all of its potentials. The newest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Interlife General and Sidma SA

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

The idea behind Interlife General Insurance and Sidma SA Steel 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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.