Correlation Between ABCO Electronics and SIMMTECH
Can any of the company-specific risk be diversified away by investing in both ABCO Electronics and SIMMTECH 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 ABCO Electronics and SIMMTECH into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between ABCO Electronics Co and SIMMTECH Co, you can compare the effects of market volatilities on ABCO Electronics and SIMMTECH 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 ABCO Electronics with a short position of SIMMTECH. Check out your portfolio center. Please also check ongoing floating volatility patterns of ABCO Electronics and SIMMTECH.
Diversification Opportunities for ABCO Electronics and SIMMTECH
0.92 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between ABCO and SIMMTECH is 0.92. Overlapping area represents the amount of risk that can be diversified away by holding ABCO Electronics Co and SIMMTECH Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SIMMTECH and ABCO Electronics 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 ABCO Electronics Co are associated (or correlated) with SIMMTECH. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SIMMTECH has no effect on the direction of ABCO Electronics i.e., ABCO Electronics and SIMMTECH go up and down completely randomly.
Pair Corralation between ABCO Electronics and SIMMTECH
Assuming the 90 days trading horizon ABCO Electronics Co is expected to generate 1.01 times more return on investment than SIMMTECH. However, ABCO Electronics is 1.01 times more volatile than SIMMTECH Co. It trades about -0.14 of its potential returns per unit of risk. SIMMTECH Co is currently generating about -0.48 per unit of risk. If you would invest 520,000 in ABCO Electronics Co on August 28, 2024 and sell it today you would lose (50,500) from holding ABCO Electronics Co or give up 9.71% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
ABCO Electronics Co vs. SIMMTECH Co
Performance |
| Timeline |
| ABCO Electronics |
| SIMMTECH |
ABCO Electronics and SIMMTECH Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ABCO Electronics and SIMMTECH
The main advantage of trading using opposite ABCO Electronics and SIMMTECH positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ABCO Electronics position performs unexpectedly, SIMMTECH 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 SIMMTECH will offset losses from the drop in SIMMTECH's long position.| ABCO Electronics vs. Korea Real Estate | ABCO Electronics vs. Korea Ratings Co | ABCO Electronics vs. IQuest Co | ABCO Electronics vs. Wonbang Tech Co |
| SIMMTECH vs. Shinil Electronics Co | SIMMTECH vs. Seoul Electronics Telecom | SIMMTECH vs. ABCO Electronics Co | SIMMTECH vs. Daekyung Machinery Engineering |
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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.
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