Correlation Between Spolytech and Solution Advanced
Can any of the company-specific risk be diversified away by investing in both Spolytech and Solution Advanced 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 Spolytech and Solution Advanced into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Spolytech Co and Solution Advanced Technology, you can compare the effects of market volatilities on Spolytech and Solution Advanced 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 Spolytech with a short position of Solution Advanced. Check out your portfolio center. Please also check ongoing floating volatility patterns of Spolytech and Solution Advanced.
Diversification Opportunities for Spolytech and Solution Advanced
0.3 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Spolytech and Solution is 0.3. Overlapping area represents the amount of risk that can be diversified away by holding Spolytech Co and Solution Advanced Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Solution Advanced and Spolytech 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 Spolytech Co are associated (or correlated) with Solution Advanced. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Solution Advanced has no effect on the direction of Spolytech i.e., Spolytech and Solution Advanced go up and down completely randomly.
Pair Corralation between Spolytech and Solution Advanced
Assuming the 90 days trading horizon Spolytech is expected to generate 1.46 times less return on investment than Solution Advanced. But when comparing it to its historical volatility, Spolytech Co is 1.47 times less risky than Solution Advanced. It trades about 0.32 of its potential returns per unit of risk. Solution Advanced Technology is currently generating about 0.32 of returns per unit of risk over similar time horizon. If you would invest 130,900 in Solution Advanced Technology on November 3, 2024 and sell it today you would earn a total of 30,700 from holding Solution Advanced Technology or generate 23.45% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Spolytech Co vs. Solution Advanced Technology
Performance |
| Timeline |
| Spolytech |
| Solution Advanced |
Spolytech and Solution Advanced Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Spolytech and Solution Advanced
The main advantage of trading using opposite Spolytech and Solution Advanced positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Spolytech position performs unexpectedly, Solution Advanced 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 Solution Advanced will offset losses from the drop in Solution Advanced's long position.| Spolytech vs. Inzi Display CoLtd | Spolytech vs. Sangsin Energy Display | Spolytech vs. Daishin Information Communications | Spolytech vs. Seoul Food Industrial |
| Solution Advanced vs. LG Household Healthcare | Solution Advanced vs. Cloud Air CoLtd | Solution Advanced vs. InnoTherapy | Solution Advanced vs. DC Media Co |
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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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