Correlation Between Satsuma Pharmaceuticals and Seneca Foods

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Can any of the company-specific risk be diversified away by investing in both Satsuma Pharmaceuticals and Seneca Foods 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 Satsuma Pharmaceuticals and Seneca Foods into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Satsuma Pharmaceuticals and Seneca Foods Corp, you can compare the effects of market volatilities on Satsuma Pharmaceuticals and Seneca Foods 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 Satsuma Pharmaceuticals with a short position of Seneca Foods. Check out your portfolio center. Please also check ongoing floating volatility patterns of Satsuma Pharmaceuticals and Seneca Foods.

Diversification Opportunities for Satsuma Pharmaceuticals and Seneca Foods

-0.8
  Correlation Coefficient

Pay attention - limited upside

The 3 months correlation between Satsuma and Seneca is -0.8. Overlapping area represents the amount of risk that can be diversified away by holding Satsuma Pharmaceuticals and Seneca Foods Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Seneca Foods Corp and Satsuma Pharmaceuticals 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 Satsuma Pharmaceuticals are associated (or correlated) with Seneca Foods. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Seneca Foods Corp has no effect on the direction of Satsuma Pharmaceuticals i.e., Satsuma Pharmaceuticals and Seneca Foods go up and down completely randomly.

Pair Corralation between Satsuma Pharmaceuticals and Seneca Foods

Given the investment horizon of 90 days Satsuma Pharmaceuticals is expected to under-perform the Seneca Foods. In addition to that, Satsuma Pharmaceuticals is 2.4 times more volatile than Seneca Foods Corp. It trades about 0.0 of its total potential returns per unit of risk. Seneca Foods Corp is currently generating about 0.05 per unit of volatility. If you would invest  4,142  in Seneca Foods Corp on September 4, 2022 and sell it today you would earn a total of  2,564  from holding Seneca Foods Corp or generate 61.9% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthSignificant
Accuracy100.0%
ValuesDaily Returns

Satsuma Pharmaceuticals  vs.  Seneca Foods Corp

 Performance (%) 
       Timeline  
Satsuma Pharmaceuticals 
Satsuma Performance
0 of 100
Over the last 90 days Satsuma Pharmaceuticals has generated negative risk-adjusted returns adding no value to investors with long positions. Despite unsteady performance in the last few months, the Stock's basic indicators remain somewhat strong which may send shares a bit higher in January 2023. The current disturbance may also be a sign of long term up-swing for the company investors.

Satsuma Price Channel

Seneca Foods Corp 
Seneca Performance
12 of 100
Compared to the overall equity markets, risk-adjusted returns on investments in Seneca Foods Corp are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak technical and fundamental indicators, Seneca Foods sustained solid returns over the last few months and may actually be approaching a breakup point.

Seneca Price Channel

Satsuma Pharmaceuticals and Seneca Foods Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Satsuma Pharmaceuticals and Seneca Foods

The main advantage of trading using opposite Satsuma Pharmaceuticals and Seneca Foods positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Satsuma Pharmaceuticals position performs unexpectedly, Seneca Foods 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 Seneca Foods will offset losses from the drop in Seneca Foods' long position.
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The idea behind Satsuma Pharmaceuticals and Seneca Foods Corp 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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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 Commodity Channel Index module to use Commodity Channel Index to analyze current equity momentum.

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