Correlation Between Simple Mart and Planet Technology
Can any of the company-specific risk be diversified away by investing in both Simple Mart and Planet 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 Planet 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 Planet Technology, you can compare the effects of market volatilities on Simple Mart and Planet 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 Planet Technology. Check out your portfolio center. Please also check ongoing floating volatility patterns of Simple Mart and Planet Technology.
Diversification Opportunities for Simple Mart and Planet Technology
-0.02 | Correlation Coefficient |
Good diversification
The 3 months correlation between Simple and Planet is -0.02. Overlapping area represents the amount of risk that can be diversified away by holding Simple Mart Retail and Planet Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Planet 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 Planet Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Planet Technology has no effect on the direction of Simple Mart i.e., Simple Mart and Planet Technology go up and down completely randomly.
Pair Corralation between Simple Mart and Planet Technology
Assuming the 90 days trading horizon Simple Mart is expected to generate 4.56 times less return on investment than Planet Technology. But when comparing it to its historical volatility, Simple Mart Retail is 1.77 times less risky than Planet Technology. It trades about 0.02 of its potential returns per unit of risk. Planet Technology is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 12,800 in Planet Technology on September 14, 2024 and sell it today you would earn a total of 2,500 from holding Planet Technology or generate 19.53% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Simple Mart Retail vs. Planet Technology
Performance |
| Timeline |
| Simple Mart Retail |
| Planet Technology |
Simple Mart and Planet Technology Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Simple Mart and Planet Technology
The main advantage of trading using opposite Simple Mart and Planet Technology positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Simple Mart position performs unexpectedly, Planet 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 Planet Technology will offset losses from the drop in Planet 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 |
| Planet Technology vs. Mechema Chemicals Int | Planet Technology vs. Simple Mart Retail | Planet Technology vs. Sinopac Financial Holdings | Planet Technology vs. Farglory FTZ 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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.
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