Correlation Between SFA Engineering and ICD
Can any of the company-specific risk be diversified away by investing in both SFA Engineering and ICD 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 SFA Engineering and ICD into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between SFA Engineering and ICD Co, you can compare the effects of market volatilities on SFA Engineering and ICD 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 SFA Engineering with a short position of ICD. Check out your portfolio center. Please also check ongoing floating volatility patterns of SFA Engineering and ICD.
Diversification Opportunities for SFA Engineering and ICD
-0.45 | Correlation Coefficient |
Very good diversification
The 3 months correlation between SFA and ICD is -0.45. Overlapping area represents the amount of risk that can be diversified away by holding SFA Engineering and ICD Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ICD Co and SFA Engineering 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 SFA Engineering are associated (or correlated) with ICD. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ICD Co has no effect on the direction of SFA Engineering i.e., SFA Engineering and ICD go up and down completely randomly.
Pair Corralation between SFA Engineering and ICD
Assuming the 90 days trading horizon SFA Engineering is expected to generate 0.54 times more return on investment than ICD. However, SFA Engineering is 1.84 times less risky than ICD. It trades about 0.26 of its potential returns per unit of risk. ICD Co is currently generating about 0.02 per unit of risk. If you would invest 1,905,000 in SFA Engineering on November 27, 2024 and sell it today you would earn a total of 160,000 from holding SFA Engineering or generate 8.4% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
SFA Engineering vs. ICD Co
Performance |
| Timeline |
| SFA Engineering |
| ICD Co |
SFA Engineering and ICD Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SFA Engineering and ICD
The main advantage of trading using opposite SFA Engineering and ICD positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SFA Engineering position performs unexpectedly, ICD 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 ICD will offset losses from the drop in ICD's long position.The idea behind SFA Engineering and ICD 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.| ICD vs. SFA Engineering | ICD vs. APS Holdings | ICD vs. Soulbrain Holdings Co | ICD vs. JUSUNG ENGINEERING 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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.
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