Correlation Between Temple Bar and Seraphim Space

Can any of the company-specific risk be diversified away by investing in both Temple Bar and Seraphim Space 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 Temple Bar and Seraphim Space into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Temple Bar Investment and Seraphim Space Investment, you can compare the effects of market volatilities on Temple Bar and Seraphim Space 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 Temple Bar with a short position of Seraphim Space. Check out your portfolio center. Please also check ongoing floating volatility patterns of Temple Bar and Seraphim Space.

Diversification Opportunities for Temple Bar and Seraphim Space

0.89

Correlation Coefficient

Temple Bar  Seraphim Space

Very poor diversification

The 3 months correlation between Temple and Seraphim is 0.89. Overlapping area represents the amount of risk that can be diversified away by holding Temple Bar Investment and Seraphim Space Investment in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Seraphim Space Investment and Temple Bar 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 Temple Bar Investment are associated (or correlated) with Seraphim Space. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Seraphim Space Investment has no effect on the direction of Temple Bar i.e., Temple Bar and Seraphim Space go up and down completely randomly.

Pair Corralation between Temple Bar and Seraphim Space

Assuming the 90 days trading horizon Temple Bar is expected to generate 3.97 times less return on investment than Seraphim Space. But when comparing it to its historical volatility, Temple Bar Investment is 4.86 times less risky than Seraphim Space. It trades about 0.21 of its potential returns per unit of risk. Seraphim Space Investment is currently generating about 0.17 of returns per unit of risk over similar time horizon. If you would invest  7,260  in Seraphim Space Investment on April 16, 2025 and sell it today you would earn a total of  740.00  from holding Seraphim Space Investment or generate 10.19% return on investment over 90 days.

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

Temple Bar Investment  vs.  Seraphim Space Investment

Temple Bar Investment

Risk-Adjusted Performance

Very Strong

Compared to the overall equity markets, risk-adjusted returns on investments in Temple Bar Investment are ranked lower than 33 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unsteady basic indicators, Temple Bar unveiled solid returns over the last few months and may actually be approaching a breakup point.

Seraphim Space Investment

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Seraphim Space Investment are ranked lower than 23 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Seraphim Space unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Temple Bar and Seraphim Space

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

The idea behind Temple Bar Investment and Seraphim Space Investment 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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.