Correlation Between Simple Mart and ADLINK Technology
Can any of the company-specific risk be diversified away by investing in both Simple Mart and ADLINK 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 ADLINK 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 ADLINK Technology, you can compare the effects of market volatilities on Simple Mart and ADLINK 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 ADLINK Technology. Check out your portfolio center. Please also check ongoing floating volatility patterns of Simple Mart and ADLINK Technology.
Diversification Opportunities for Simple Mart and ADLINK Technology
-0.59 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Simple and ADLINK is -0.59. Overlapping area represents the amount of risk that can be diversified away by holding Simple Mart Retail and ADLINK Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ADLINK 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 ADLINK Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ADLINK Technology has no effect on the direction of Simple Mart i.e., Simple Mart and ADLINK Technology go up and down completely randomly.
Pair Corralation between Simple Mart and ADLINK Technology
Assuming the 90 days trading horizon Simple Mart Retail is expected to under-perform the ADLINK Technology. But the stock apears to be less risky and, when comparing its historical volatility, Simple Mart Retail is 2.16 times less risky than ADLINK Technology. The stock trades about -0.16 of its potential returns per unit of risk. The ADLINK Technology is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest 7,480 in ADLINK Technology on October 31, 2024 and sell it today you would earn a total of 60.00 from holding ADLINK Technology or generate 0.8% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Simple Mart Retail vs. ADLINK Technology
Performance |
| Timeline |
| Simple Mart Retail |
| ADLINK Technology |
Simple Mart and ADLINK Technology Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Simple Mart and ADLINK Technology
The main advantage of trading using opposite Simple Mart and ADLINK Technology positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Simple Mart position performs unexpectedly, ADLINK 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 ADLINK Technology will offset losses from the drop in ADLINK 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 |
| ADLINK Technology vs. Chief Telecom | ADLINK Technology vs. Hwa Fong Rubber | ADLINK Technology vs. Mospec Semiconductor Corp | ADLINK Technology vs. Sinopower Semiconductor |
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 Portfolio Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.
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