Correlation Between SIMMTECH and Microfriend
Can any of the company-specific risk be diversified away by investing in both SIMMTECH and Microfriend 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 Microfriend into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between SIMMTECH Co and Microfriend, you can compare the effects of market volatilities on SIMMTECH and Microfriend 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 Microfriend. Check out your portfolio center. Please also check ongoing floating volatility patterns of SIMMTECH and Microfriend.
Diversification Opportunities for SIMMTECH and Microfriend
0.09 | Correlation Coefficient |
Significant diversification
The 3 months correlation between SIMMTECH and Microfriend is 0.09. Overlapping area represents the amount of risk that can be diversified away by holding SIMMTECH Co and Microfriend in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Microfriend 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 Microfriend. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Microfriend has no effect on the direction of SIMMTECH i.e., SIMMTECH and Microfriend go up and down completely randomly.
Pair Corralation between SIMMTECH and Microfriend
Assuming the 90 days trading horizon SIMMTECH Co is expected to under-perform the Microfriend. But the stock apears to be less risky and, when comparing its historical volatility, SIMMTECH Co is 1.5 times less risky than Microfriend. The stock trades about -0.48 of its potential returns per unit of risk. The Microfriend is currently generating about -0.25 of returns per unit of risk over similar time horizon. If you would invest 420,000 in Microfriend on August 27, 2024 and sell it today you would lose (97,500) from holding Microfriend or give up 23.21% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
SIMMTECH Co vs. Microfriend
Performance |
| Timeline |
| SIMMTECH |
| Microfriend |
SIMMTECH and Microfriend Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SIMMTECH and Microfriend
The main advantage of trading using opposite SIMMTECH and Microfriend positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SIMMTECH position performs unexpectedly, Microfriend 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 Microfriend will offset losses from the drop in Microfriend's long position.| SIMMTECH vs. Shinil Electronics Co | SIMMTECH vs. Seoul Electronics Telecom | SIMMTECH vs. ABCO Electronics Co | SIMMTECH vs. Daekyung Machinery Engineering |
| Microfriend vs. SK Hynix | Microfriend vs. People Technology | Microfriend vs. SIMMTECH Co | Microfriend vs. Haesung DS 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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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