Correlation Between SIMMTECH and INNOX Advanced
Can any of the company-specific risk be diversified away by investing in both SIMMTECH and INNOX Advanced 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 INNOX Advanced into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between SIMMTECH Co and INNOX Advanced Materials, you can compare the effects of market volatilities on SIMMTECH and INNOX Advanced 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 INNOX Advanced. Check out your portfolio center. Please also check ongoing floating volatility patterns of SIMMTECH and INNOX Advanced.
Diversification Opportunities for SIMMTECH and INNOX Advanced
0.93 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between SIMMTECH and INNOX is 0.93. Overlapping area represents the amount of risk that can be diversified away by holding SIMMTECH Co and INNOX Advanced Materials in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on INNOX Advanced Materials 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 INNOX Advanced. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of INNOX Advanced Materials has no effect on the direction of SIMMTECH i.e., SIMMTECH and INNOX Advanced go up and down completely randomly.
Pair Corralation between SIMMTECH and INNOX Advanced
Assuming the 90 days trading horizon SIMMTECH Co is expected to under-perform the INNOX Advanced. In addition to that, SIMMTECH is 1.34 times more volatile than INNOX Advanced Materials. It trades about -0.43 of its total potential returns per unit of risk. INNOX Advanced Materials is currently generating about -0.03 per unit of volatility. If you would invest 2,310,000 in INNOX Advanced Materials on August 25, 2024 and sell it today you would lose (55,000) from holding INNOX Advanced Materials or give up 2.38% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 95.65% |
| Values | Daily Returns |
SIMMTECH Co vs. INNOX Advanced Materials
Performance |
| Timeline |
| SIMMTECH |
| INNOX Advanced Materials |
SIMMTECH and INNOX Advanced Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SIMMTECH and INNOX Advanced
The main advantage of trading using opposite SIMMTECH and INNOX Advanced positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SIMMTECH position performs unexpectedly, INNOX Advanced 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 INNOX Advanced will offset losses from the drop in INNOX Advanced's long position.| SIMMTECH vs. People Technology | SIMMTECH vs. iNtRON Biotechnology | SIMMTECH vs. Hanjin Transportation Co | SIMMTECH vs. Alton Sports CoLtd |
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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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.
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