Correlation Between SIMMTECH and Hana Technology

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Can any of the company-specific risk be diversified away by investing in both SIMMTECH and Hana Technology 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 Hana Technology into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between SIMMTECH Co and Hana Technology Co, you can compare the effects of market volatilities on SIMMTECH and Hana Technology 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 Hana Technology. Check out your portfolio center. Please also check ongoing floating volatility patterns of SIMMTECH and Hana Technology.

Diversification Opportunities for SIMMTECH and Hana Technology

0.94
  Correlation Coefficient

Almost no diversification

The 3 months correlation between SIMMTECH and Hana is 0.94. Overlapping area represents the amount of risk that can be diversified away by holding SIMMTECH Co and Hana Technology Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hana Technology 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 Hana Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hana Technology has no effect on the direction of SIMMTECH i.e., SIMMTECH and Hana Technology go up and down completely randomly.

Pair Corralation between SIMMTECH and Hana Technology

Assuming the 90 days trading horizon SIMMTECH Co is expected to generate 0.71 times more return on investment than Hana Technology. However, SIMMTECH Co is 1.41 times less risky than Hana Technology. It trades about -0.05 of its potential returns per unit of risk. Hana Technology Co is currently generating about -0.09 per unit of risk. If you would invest  1,210,000  in SIMMTECH Co on September 15, 2024 and sell it today you would lose (49,000) from holding SIMMTECH Co or give up 4.05% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthVery Strong
Accuracy100.0%
ValuesDaily Returns

SIMMTECH Co  vs.  Hana Technology Co

 Performance 
       Timeline  
SIMMTECH 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days SIMMTECH Co has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain somewhat strong which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long term up-swing for the company investors.
Hana Technology 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days Hana Technology Co has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain somewhat strong which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

SIMMTECH and Hana Technology Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with SIMMTECH and Hana Technology

The main advantage of trading using opposite SIMMTECH and Hana Technology positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SIMMTECH position performs unexpectedly, Hana Technology 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 Hana Technology will offset losses from the drop in Hana Technology's long position.
The idea behind SIMMTECH Co and Hana Technology Co pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.
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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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.

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