Correlation Between Simple Mart and Everlight Electronics
Can any of the company-specific risk be diversified away by investing in both Simple Mart and Everlight Electronics 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 Simple Mart and Everlight Electronics into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Simple Mart Retail and Everlight Electronics Co, you can compare the effects of market volatilities on Simple Mart and Everlight Electronics 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 Simple Mart with a short position of Everlight Electronics. Check out your portfolio center. Please also check ongoing floating volatility patterns of Simple Mart and Everlight Electronics.
Diversification Opportunities for Simple Mart and Everlight Electronics
-0.61 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Simple and Everlight is -0.61. Overlapping area represents the amount of risk that can be diversified away by holding Simple Mart Retail and Everlight Electronics Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Everlight Electronics and Simple Mart 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 Simple Mart Retail are associated (or correlated) with Everlight Electronics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Everlight Electronics has no effect on the direction of Simple Mart i.e., Simple Mart and Everlight Electronics go up and down completely randomly.
Pair Corralation between Simple Mart and Everlight Electronics
Assuming the 90 days trading horizon Simple Mart Retail is expected to under-perform the Everlight Electronics. But the stock apears to be less risky and, when comparing its historical volatility, Simple Mart Retail is 2.0 times less risky than Everlight Electronics. The stock trades about -0.15 of its potential returns per unit of risk. The Everlight Electronics Co is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest 7,810 in Everlight Electronics Co on November 4, 2024 and sell it today you would earn a total of 560.00 from holding Everlight Electronics Co or generate 7.17% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Simple Mart Retail vs. Everlight Electronics Co
Performance |
| Timeline |
| Simple Mart Retail |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
| Everlight Electronics |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Weak
Simple Mart and Everlight Electronics Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Simple Mart and Everlight Electronics
The main advantage of trading using opposite Simple Mart and Everlight Electronics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Simple Mart position performs unexpectedly, Everlight Electronics 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 Everlight Electronics will offset losses from the drop in Everlight Electronics' long position.The idea behind Simple Mart Retail and Everlight Electronics 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.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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..
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