Correlation Between Test Research and Sitronix Technology
Can any of the company-specific risk be diversified away by investing in both Test Research and Sitronix 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 Test Research and Sitronix Technology into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Test Research and Sitronix Technology Corp, you can compare the effects of market volatilities on Test Research and Sitronix 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 Test Research with a short position of Sitronix Technology. Check out your portfolio center. Please also check ongoing floating volatility patterns of Test Research and Sitronix Technology.
Diversification Opportunities for Test Research and Sitronix Technology
0.49 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Test and Sitronix is 0.49. Overlapping area represents the amount of risk that can be diversified away by holding Test Research and Sitronix Technology Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sitronix Technology Corp and Test Research 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 Test Research are associated (or correlated) with Sitronix Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sitronix Technology Corp has no effect on the direction of Test Research i.e., Test Research and Sitronix Technology go up and down completely randomly.
Pair Corralation between Test Research and Sitronix Technology
Assuming the 90 days trading horizon Test Research is expected to generate 1.85 times more return on investment than Sitronix Technology. However, Test Research is 1.85 times more volatile than Sitronix Technology Corp. It trades about -0.04 of its potential returns per unit of risk. Sitronix Technology Corp is currently generating about -0.09 per unit of risk. If you would invest 17,250 in Test Research on August 29, 2024 and sell it today you would lose (3,900) from holding Test Research or give up 22.61% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Test Research vs. Sitronix Technology Corp
Performance |
| Timeline |
| Test Research |
| Sitronix Technology Corp |
Test Research and Sitronix Technology Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Test Research and Sitronix Technology
The main advantage of trading using opposite Test Research and Sitronix Technology positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Test Research position performs unexpectedly, Sitronix 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 Sitronix Technology will offset losses from the drop in Sitronix Technology's long position.| Test Research vs. Sitronix Technology Corp | Test Research vs. Elan Microelectronics Corp | Test Research vs. Global Unichip Corp | Test Research vs. Holtek Semiconductor |
| Sitronix Technology vs. Novatek Microelectronics Corp | Sitronix Technology vs. FocalTech Systems Co | Sitronix Technology vs. Elan Microelectronics Corp | Sitronix Technology vs. Realtek Semiconductor 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 Portfolio Anywhere module to track or share privately all of your investments from the convenience of any device.
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