Correlation Between Simple Mart and Microtips Technology
Can any of the company-specific risk be diversified away by investing in both Simple Mart and Microtips 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 Simple Mart and Microtips Technology 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 Microtips Technology, you can compare the effects of market volatilities on Simple Mart and Microtips 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 Simple Mart with a short position of Microtips Technology. Check out your portfolio center. Please also check ongoing floating volatility patterns of Simple Mart and Microtips Technology.
Diversification Opportunities for Simple Mart and Microtips Technology
-0.32 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Simple and Microtips is -0.32. Overlapping area represents the amount of risk that can be diversified away by holding Simple Mart Retail and Microtips Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Microtips Technology 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 Microtips Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Microtips Technology has no effect on the direction of Simple Mart i.e., Simple Mart and Microtips Technology go up and down completely randomly.
Pair Corralation between Simple Mart and Microtips Technology
Assuming the 90 days trading horizon Simple Mart Retail is expected to generate 0.73 times more return on investment than Microtips Technology. However, Simple Mart Retail is 1.38 times less risky than Microtips Technology. It trades about 0.07 of its potential returns per unit of risk. Microtips Technology is currently generating about -0.17 per unit of risk. If you would invest 4,120 in Simple Mart Retail on August 28, 2024 and sell it today you would earn a total of 50.00 from holding Simple Mart Retail or generate 1.21% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 95.45% |
| Values | Daily Returns |
Simple Mart Retail vs. Microtips Technology
Performance |
| Timeline |
| Simple Mart Retail |
| Microtips Technology |
Simple Mart and Microtips Technology Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Simple Mart and Microtips Technology
The main advantage of trading using opposite Simple Mart and Microtips Technology positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Simple Mart position performs unexpectedly, Microtips 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 Microtips Technology will offset losses from the drop in Microtips Technology's long position.| Simple Mart vs. Taiwan Semiconductor Manufacturing | Simple Mart vs. Hon Hai Precision | Simple Mart vs. MediaTek | Simple Mart vs. Chunghwa Telecom Co |
| Microtips Technology vs. Global Unichip Corp | Microtips Technology vs. Asmedia Technology | Microtips Technology vs. Unimicron Technology Corp | Microtips Technology vs. Novatek Microelectronics Corp |
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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