Correlation Between SFP Tech and Magni Tech
Can any of the company-specific risk be diversified away by investing in both SFP Tech and Magni Tech 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 SFP Tech and Magni Tech into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between SFP Tech Holdings and Magni Tech Industries, you can compare the effects of market volatilities on SFP Tech and Magni Tech 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 SFP Tech with a short position of Magni Tech. Check out your portfolio center. Please also check ongoing floating volatility patterns of SFP Tech and Magni Tech.
Diversification Opportunities for SFP Tech and Magni Tech
0.05 | Correlation Coefficient |
Significant diversification
The 3 months correlation between SFP and Magni is 0.05. Overlapping area represents the amount of risk that can be diversified away by holding SFP Tech Holdings and Magni Tech Industries in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Magni Tech Industries and SFP Tech 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 SFP Tech Holdings are associated (or correlated) with Magni Tech. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Magni Tech Industries has no effect on the direction of SFP Tech i.e., SFP Tech and Magni Tech go up and down completely randomly.
Pair Corralation between SFP Tech and Magni Tech
Assuming the 90 days trading horizon SFP Tech Holdings is expected to generate 2.55 times more return on investment than Magni Tech. However, SFP Tech is 2.55 times more volatile than Magni Tech Industries. It trades about 0.21 of its potential returns per unit of risk. Magni Tech Industries is currently generating about 0.46 per unit of risk. If you would invest 61.00 in SFP Tech Holdings on August 28, 2024 and sell it today you would earn a total of 7.00 from holding SFP Tech Holdings or generate 11.48% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
SFP Tech Holdings vs. Magni Tech Industries
Performance |
| Timeline |
| SFP Tech Holdings |
| Magni Tech Industries |
SFP Tech and Magni Tech Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SFP Tech and Magni Tech
The main advantage of trading using opposite SFP Tech and Magni Tech positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SFP Tech position performs unexpectedly, Magni Tech 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 Magni Tech will offset losses from the drop in Magni Tech's long position.| SFP Tech vs. MClean Technologies Bhd | SFP Tech vs. PMB Technology Bhd | SFP Tech vs. Awanbiru Technology Bhd | SFP Tech vs. Sungei Bagan Rubber |
| Magni Tech vs. Digistar Bhd | Magni Tech vs. Minetech Resources Bhd | Magni Tech vs. OpenSys M Bhd | Magni Tech vs. Insas Bhd |
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 Portfolio File Import module to quickly import all of your third-party portfolios from your local drive in csv format.
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