Correlation Between Sachem Capital and Iridium Communications

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

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

Diversification Opportunities for Sachem Capital and Iridium Communications

0.26

Correlation Coefficient

Sachem Capital  Iridium Communications

Modest diversification

The 3 months correlation between Sachem and Iridium is 0.26. Overlapping area represents the amount of risk that can be diversified away by holding Sachem Capital Corp and Iridium Communications in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Iridium Communications and Sachem Capital 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 Sachem Capital Corp are associated (or correlated) with Iridium Communications. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Iridium Communications has no effect on the direction of Sachem Capital i.e., Sachem Capital and Iridium Communications go up and down completely randomly.

Pair Corralation between Sachem Capital and Iridium Communications

Given the investment horizon of 90 days Sachem Capital Corp is expected to generate 1.5 times more return on investment than Iridium Communications. However, Sachem Capital is 1.5 times more volatile than Iridium Communications. It trades about -0.02 of its potential returns per unit of risk. Iridium Communications is currently generating about -0.12 per unit of risk. If you would invest  103.00  in Sachem Capital Corp on February 18, 2025 and sell it today you would lose (12.00) from holding Sachem Capital Corp or give up 11.65% of portfolio value over 90 days.

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

Sachem Capital Corp  vs.  Iridium Communications

Sachem Capital Corp

Risk-Adjusted Performance

Very Weak

Over the last 90 days Sachem Capital Corp has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest inconsistent performance, the Stock's fundamental indicators remain strong and the recent confusion on Wall Street may also be a sign of long-lasting gains for the firm traders.

Iridium Communications

Risk-Adjusted Performance

Very Weak

Over the last 90 days Iridium Communications has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's fundamental indicators remain very healthy which may send shares a bit higher in June 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Pair Trading with Sachem Capital and Iridium Communications

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

The idea behind Sachem Capital Corp and Iridium Communications 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.