Correlation Between SS TECH and Spolytech
Can any of the company-specific risk be diversified away by investing in both SS TECH and Spolytech 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 SS TECH and Spolytech into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between SS TECH and Spolytech Co, you can compare the effects of market volatilities on SS TECH and Spolytech 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 SS TECH with a short position of Spolytech. Check out your portfolio center. Please also check ongoing floating volatility patterns of SS TECH and Spolytech.
Diversification Opportunities for SS TECH and Spolytech
Very poor diversification
The 3 months correlation between 101490 and Spolytech is 0.84. Overlapping area represents the amount of risk that can be diversified away by holding SS TECH and Spolytech Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Spolytech and SS 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 SS TECH are associated (or correlated) with Spolytech. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Spolytech has no effect on the direction of SS TECH i.e., SS TECH and Spolytech go up and down completely randomly.
Pair Corralation between SS TECH and Spolytech
Assuming the 90 days trading horizon SS TECH is expected to generate 1.47 times less return on investment than Spolytech. In addition to that, SS TECH is 2.0 times more volatile than Spolytech Co. It trades about 0.16 of its total potential returns per unit of risk. Spolytech Co is currently generating about 0.46 per unit of volatility. If you would invest 146,100 in Spolytech Co on December 4, 2024 and sell it today you would earn a total of 16,500 from holding Spolytech Co or generate 11.29% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
SS TECH vs. Spolytech Co
Performance |
| Timeline |
| SS TECH |
| Spolytech |
SS TECH and Spolytech Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SS TECH and Spolytech
The main advantage of trading using opposite SS TECH and Spolytech positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SS TECH position performs unexpectedly, Spolytech 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 Spolytech will offset losses from the drop in Spolytech's long position.The idea behind SS TECH and Spolytech 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.| Spolytech vs. Hanjoo Light Metal | Spolytech vs. Heungkuk Metaltech CoLtd | Spolytech vs. Young Heung Iron | Spolytech vs. Hyundai BNG Steel |
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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.
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