Correlation Between SIMMTECH and Clean Science
Can any of the company-specific risk be diversified away by investing in both SIMMTECH and Clean Science 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 Clean Science into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between SIMMTECH Co and Clean Science co, you can compare the effects of market volatilities on SIMMTECH and Clean Science 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 Clean Science. Check out your portfolio center. Please also check ongoing floating volatility patterns of SIMMTECH and Clean Science.
Diversification Opportunities for SIMMTECH and Clean Science
0.86 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between SIMMTECH and Clean is 0.86. Overlapping area represents the amount of risk that can be diversified away by holding SIMMTECH Co and Clean Science co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Clean Science co 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 Clean Science. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Clean Science co has no effect on the direction of SIMMTECH i.e., SIMMTECH and Clean Science go up and down completely randomly.
Pair Corralation between SIMMTECH and Clean Science
Assuming the 90 days trading horizon SIMMTECH Co is expected to under-perform the Clean Science. In addition to that, SIMMTECH is 1.21 times more volatile than Clean Science co. It trades about -0.05 of its total potential returns per unit of risk. Clean Science co is currently generating about -0.06 per unit of volatility. If you would invest 1,033,262 in Clean Science co on August 24, 2024 and sell it today you would lose (573,262) from holding Clean Science co or give up 55.48% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
SIMMTECH Co vs. Clean Science co
Performance |
| Timeline |
| SIMMTECH |
| Clean Science co |
SIMMTECH and Clean Science Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SIMMTECH and Clean Science
The main advantage of trading using opposite SIMMTECH and Clean Science positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SIMMTECH position performs unexpectedly, Clean Science 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 Clean Science will offset losses from the drop in Clean Science's long position.| SIMMTECH vs. Dongnam Chemical Co | SIMMTECH vs. Cube Entertainment | SIMMTECH vs. LG Chemicals | SIMMTECH vs. Kaonmedia Co |
| Clean Science vs. Samsung Electronics Co | Clean Science vs. Samsung Electronics Co | Clean Science vs. Hyundai Motor Co | Clean Science vs. Hyundai Motor |
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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..
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