Correlation Between RF Materials and SIMMTECH
Can any of the company-specific risk be diversified away by investing in both RF Materials and SIMMTECH 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 RF Materials and SIMMTECH into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between RF Materials Co and SIMMTECH Co, you can compare the effects of market volatilities on RF Materials and SIMMTECH 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 RF Materials with a short position of SIMMTECH. Check out your portfolio center. Please also check ongoing floating volatility patterns of RF Materials and SIMMTECH.
Diversification Opportunities for RF Materials and SIMMTECH
0.65 | Correlation Coefficient |
Poor diversification
The 3 months correlation between 327260 and SIMMTECH is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding RF Materials Co and SIMMTECH Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SIMMTECH and RF Materials 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 RF Materials Co are associated (or correlated) with SIMMTECH. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SIMMTECH has no effect on the direction of RF Materials i.e., RF Materials and SIMMTECH go up and down completely randomly.
Pair Corralation between RF Materials and SIMMTECH
Assuming the 90 days trading horizon RF Materials Co is expected to generate 1.53 times more return on investment than SIMMTECH. However, RF Materials is 1.53 times more volatile than SIMMTECH Co. It trades about -0.13 of its potential returns per unit of risk. SIMMTECH Co is currently generating about -0.6 per unit of risk. If you would invest 629,000 in RF Materials Co on September 1, 2024 and sell it today you would lose (87,000) from holding RF Materials Co or give up 13.83% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 95.65% |
| Values | Daily Returns |
RF Materials Co vs. SIMMTECH Co
Performance |
| Timeline |
| RF Materials |
| SIMMTECH |
RF Materials and SIMMTECH Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with RF Materials and SIMMTECH
The main advantage of trading using opposite RF Materials and SIMMTECH positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if RF Materials position performs unexpectedly, SIMMTECH 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 SIMMTECH will offset losses from the drop in SIMMTECH's long position.| RF Materials vs. SK Hynix | RF Materials vs. LX Semicon Co | RF Materials vs. Tokai Carbon Korea | RF Materials vs. People Technology |
| SIMMTECH vs. Iljin Materials Co | SIMMTECH vs. Daishin Information Communications | SIMMTECH vs. LS Materials | SIMMTECH vs. Daou Data 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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.
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