Correlation Between SIMMTECH and JETEMA
Can any of the company-specific risk be diversified away by investing in both SIMMTECH and JETEMA 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 JETEMA into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between SIMMTECH Co and JETEMA Co, you can compare the effects of market volatilities on SIMMTECH and JETEMA 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 JETEMA. Check out your portfolio center. Please also check ongoing floating volatility patterns of SIMMTECH and JETEMA.
Diversification Opportunities for SIMMTECH and JETEMA
Excellent diversification
The 3 months correlation between SIMMTECH and JETEMA is -0.57. Overlapping area represents the amount of risk that can be diversified away by holding SIMMTECH Co and JETEMA Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on JETEMA 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 JETEMA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of JETEMA has no effect on the direction of SIMMTECH i.e., SIMMTECH and JETEMA go up and down completely randomly.
Pair Corralation between SIMMTECH and JETEMA
Assuming the 90 days trading horizon SIMMTECH Co is expected to under-perform the JETEMA. But the stock apears to be less risky and, when comparing its historical volatility, SIMMTECH Co is 1.16 times less risky than JETEMA. The stock trades about -0.63 of its potential returns per unit of risk. The JETEMA Co is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest 1,929,000 in JETEMA Co on September 3, 2024 and sell it today you would earn a total of 20,000 from holding JETEMA Co or generate 1.04% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
SIMMTECH Co vs. JETEMA Co
Performance |
| Timeline |
| SIMMTECH |
| JETEMA |
SIMMTECH and JETEMA Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SIMMTECH and JETEMA
The main advantage of trading using opposite SIMMTECH and JETEMA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SIMMTECH position performs unexpectedly, JETEMA 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 JETEMA will offset losses from the drop in JETEMA's long position.| SIMMTECH vs. Dongsin Engineering Construction | SIMMTECH vs. Doosan Fuel Cell | SIMMTECH vs. Daishin Balance 1 | SIMMTECH vs. Total Soft Bank |
| JETEMA vs. E Investment Development | JETEMA vs. Daewoo Engineering Construction | JETEMA vs. Korea Investment Holdings | JETEMA vs. Nam Hwa Construction |
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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.
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