Correlation Between TRAVEL + and SIMS METAL

Can any of the company-specific risk be diversified away by investing in both TRAVEL + 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 TRAVEL + and SIMS METAL into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between TRAVEL LEISURE DL 01 and SIMS METAL MGT, you can compare the effects of market volatilities on TRAVEL + 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 TRAVEL + with a short position of SIMS METAL. Check out your portfolio center. Please also check ongoing floating volatility patterns of TRAVEL + and SIMS METAL.

Diversification Opportunities for TRAVEL + and SIMS METAL

0.87

Correlation Coefficient

TRAVEL +  SIMS METAL

Very poor diversification

The 3 months correlation between TRAVEL and SIMS is 0.87. Overlapping area represents the amount of risk that can be diversified away by holding TRAVEL LEISURE DL 01 and SIMS METAL MGT in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SIMS METAL MGT and TRAVEL + 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 TRAVEL LEISURE DL 01 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 MGT has no effect on the direction of TRAVEL + i.e., TRAVEL + and SIMS METAL go up and down completely randomly.

Pair Corralation between TRAVEL + and SIMS METAL

Assuming the 90 days trading horizon TRAVEL LEISURE DL 01 is expected to generate 1.24 times more return on investment than SIMS METAL. However, TRAVEL + is 1.24 times more volatile than SIMS METAL MGT. It trades about 0.39 of its potential returns per unit of risk. SIMS METAL MGT is currently generating about 0.28 per unit of risk. If you would invest  4,220  in TRAVEL LEISURE DL 01 on April 24, 2025 and sell it today you would earn a total of  680.00  from holding TRAVEL LEISURE DL 01 or generate 16.11% return on investment over 90 days.

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

TRAVEL LEISURE DL 01  vs.  SIMS METAL MGT

TRAVEL LEISURE DL

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in TRAVEL LEISURE DL 01 are ranked lower than 20 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, TRAVEL + reported solid returns over the last few months and may actually be approaching a breakup point.

SIMS METAL MGT

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in SIMS METAL MGT are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of rather fragile primary indicators, SIMS METAL exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with TRAVEL + and SIMS METAL

The main advantage of trading using opposite TRAVEL + and SIMS METAL positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if TRAVEL + 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 TRAVEL LEISURE DL 01 and SIMS METAL MGT 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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.