Correlation Between SIMMTECH and Choil Aluminum
Can any of the company-specific risk be diversified away by investing in both SIMMTECH and Choil Aluminum 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 SIMMTECH and Choil Aluminum into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between SIMMTECH Co and Choil Aluminum, you can compare the effects of market volatilities on SIMMTECH and Choil Aluminum 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 SIMMTECH with a short position of Choil Aluminum. Check out your portfolio center. Please also check ongoing floating volatility patterns of SIMMTECH and Choil Aluminum.
Diversification Opportunities for SIMMTECH and Choil Aluminum
0.69 | Correlation Coefficient |
Poor diversification
The 3 months correlation between SIMMTECH and Choil is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding SIMMTECH Co and Choil Aluminum in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Choil Aluminum and SIMMTECH 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 SIMMTECH Co are associated (or correlated) with Choil Aluminum. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Choil Aluminum has no effect on the direction of SIMMTECH i.e., SIMMTECH and Choil Aluminum go up and down completely randomly.
Pair Corralation between SIMMTECH and Choil Aluminum
Assuming the 90 days trading horizon SIMMTECH Co is expected to under-perform the Choil Aluminum. In addition to that, SIMMTECH is 1.2 times more volatile than Choil Aluminum. It trades about -0.35 of its total potential returns per unit of risk. Choil Aluminum is currently generating about -0.06 per unit of volatility. If you would invest 169,200 in Choil Aluminum on August 28, 2024 and sell it today you would lose (16,000) from holding Choil Aluminum or give up 9.46% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
SIMMTECH Co vs. Choil Aluminum
Performance |
| Timeline |
| SIMMTECH |
| Choil Aluminum |
SIMMTECH and Choil Aluminum Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SIMMTECH and Choil Aluminum
The main advantage of trading using opposite SIMMTECH and Choil Aluminum positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SIMMTECH position performs unexpectedly, Choil Aluminum 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 Choil Aluminum will offset losses from the drop in Choil Aluminum's long position.| SIMMTECH vs. Shinil Electronics Co | SIMMTECH vs. Seoul Electronics Telecom | SIMMTECH vs. ABCO Electronics Co | SIMMTECH vs. Daekyung Machinery Engineering |
| Choil Aluminum vs. Hankuk Steel Wire | Choil Aluminum vs. Cuckoo Homesys Co | Choil Aluminum vs. Kukdong Oil Chemicals | Choil Aluminum vs. Hanil Iron 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 Equity Valuation module to check real value of public entities based on technical and fundamental data.
Other Complementary Tools
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| Fundamental Analysis View fundamental data based on most recent published financial statements | |
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| Equity Valuation Check real value of public entities based on technical and fundamental data | |
| Risk-Return Analysis View associations between returns expected from investment and the risk you assume |