Correlation Between S Tech and Mirle Automation
Can any of the company-specific risk be diversified away by investing in both S Tech and Mirle Automation 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 S Tech and Mirle Automation into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between S Tech Corp and Mirle Automation Corp, you can compare the effects of market volatilities on S Tech and Mirle Automation 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 S Tech with a short position of Mirle Automation. Check out your portfolio center. Please also check ongoing floating volatility patterns of S Tech and Mirle Automation.
Diversification Opportunities for S Tech and Mirle Automation
0.65 | Correlation Coefficient |
Poor diversification
The 3 months correlation between 1584 and Mirle is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding S Tech Corp and Mirle Automation Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mirle Automation Corp and S 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 S Tech Corp are associated (or correlated) with Mirle Automation. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mirle Automation Corp has no effect on the direction of S Tech i.e., S Tech and Mirle Automation go up and down completely randomly.
Pair Corralation between S Tech and Mirle Automation
Assuming the 90 days trading horizon S Tech Corp is expected to under-perform the Mirle Automation. But the stock apears to be less risky and, when comparing its historical volatility, S Tech Corp is 1.61 times less risky than Mirle Automation. The stock trades about 0.0 of its potential returns per unit of risk. The Mirle Automation Corp is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest 4,100 in Mirle Automation Corp on August 29, 2024 and sell it today you would earn a total of 3,350 from holding Mirle Automation Corp or generate 81.71% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
S Tech Corp vs. Mirle Automation Corp
Performance |
| Timeline |
| S Tech Corp |
| Mirle Automation Corp |
S Tech and Mirle Automation Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with S Tech and Mirle Automation
The main advantage of trading using opposite S Tech and Mirle Automation positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if S Tech position performs unexpectedly, Mirle Automation 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 Mirle Automation will offset losses from the drop in Mirle Automation's long position.| S Tech vs. Catcher Technology Co | S Tech vs. Solar Applied Materials | S Tech vs. Shin Zu Shing | S Tech vs. China Metal Products |
| Mirle Automation vs. Yulon Motor Co | Mirle Automation vs. Far Eastern Department | Mirle Automation vs. China Steel Corp | Mirle Automation vs. Chang Hwa Commercial |
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 Portfolio Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.
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