Correlation Between Simmtech Holdings and Samji Electronics
Can any of the company-specific risk be diversified away by investing in both Simmtech Holdings and Samji Electronics 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 Simmtech Holdings and Samji Electronics into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Simmtech Holdings Co and Samji Electronics Co, you can compare the effects of market volatilities on Simmtech Holdings and Samji Electronics 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 Simmtech Holdings with a short position of Samji Electronics. Check out your portfolio center. Please also check ongoing floating volatility patterns of Simmtech Holdings and Samji Electronics.
Diversification Opportunities for Simmtech Holdings and Samji Electronics
0.4 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Simmtech and Samji is 0.4. Overlapping area represents the amount of risk that can be diversified away by holding Simmtech Holdings Co and Samji Electronics Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Samji Electronics and Simmtech Holdings 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 Simmtech Holdings Co are associated (or correlated) with Samji Electronics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Samji Electronics has no effect on the direction of Simmtech Holdings i.e., Simmtech Holdings and Samji Electronics go up and down completely randomly.
Pair Corralation between Simmtech Holdings and Samji Electronics
Assuming the 90 days trading horizon Simmtech Holdings Co is expected to generate 1.86 times more return on investment than Samji Electronics. However, Simmtech Holdings is 1.86 times more volatile than Samji Electronics Co. It trades about 0.38 of its potential returns per unit of risk. Samji Electronics Co is currently generating about 0.49 per unit of risk. If you would invest 113,700 in Simmtech Holdings Co on November 7, 2024 and sell it today you would earn a total of 11,200 from holding Simmtech Holdings Co or generate 9.85% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Simmtech Holdings Co vs. Samji Electronics Co
Performance |
| Timeline |
| Simmtech Holdings |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
| Samji Electronics |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Modest
Simmtech Holdings and Samji Electronics Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Simmtech Holdings and Samji Electronics
The main advantage of trading using opposite Simmtech Holdings and Samji Electronics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Simmtech Holdings position performs unexpectedly, Samji Electronics 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 Samji Electronics will offset losses from the drop in Samji Electronics' long position.The idea behind Simmtech Holdings Co and Samji Electronics Co 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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.
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