Correlation Between Alton Sports and SIMMTECH
Can any of the company-specific risk be diversified away by investing in both Alton Sports 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 Alton Sports and SIMMTECH into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Alton Sports CoLtd and SIMMTECH Co, you can compare the effects of market volatilities on Alton Sports 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 Alton Sports with a short position of SIMMTECH. Check out your portfolio center. Please also check ongoing floating volatility patterns of Alton Sports and SIMMTECH.
Diversification Opportunities for Alton Sports and SIMMTECH
0.83 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Alton and SIMMTECH is 0.83. Overlapping area represents the amount of risk that can be diversified away by holding Alton Sports CoLtd and SIMMTECH Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SIMMTECH and Alton Sports 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 Alton Sports CoLtd 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 Alton Sports i.e., Alton Sports and SIMMTECH go up and down completely randomly.
Pair Corralation between Alton Sports and SIMMTECH
Assuming the 90 days trading horizon Alton Sports is expected to generate 4.43 times less return on investment than SIMMTECH. But when comparing it to its historical volatility, Alton Sports CoLtd is 3.81 times less risky than SIMMTECH. It trades about 0.27 of its potential returns per unit of risk. SIMMTECH Co is currently generating about 0.31 of returns per unit of risk over similar time horizon. If you would invest 1,092,000 in SIMMTECH Co on November 1, 2024 and sell it today you would earn a total of 211,000 from holding SIMMTECH Co or generate 19.32% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Alton Sports CoLtd vs. SIMMTECH Co
Performance |
| Timeline |
| Alton Sports CoLtd |
| SIMMTECH |
Alton Sports and SIMMTECH Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Alton Sports and SIMMTECH
The main advantage of trading using opposite Alton Sports and SIMMTECH positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Alton Sports 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.| Alton Sports vs. Neungyule Education | Alton Sports vs. Songwon Industrial Co | Alton Sports vs. Korea Industrial Co | Alton Sports vs. YeaRimDang Publishing Co |
| SIMMTECH vs. Alton Sports CoLtd | SIMMTECH vs. Koryo Credit Information | SIMMTECH vs. Lotte Data Communication | SIMMTECH vs. Formetal 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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.
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