Correlation Between New Advanced and Simplo Technology
Can any of the company-specific risk be diversified away by investing in both New Advanced and Simplo 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 New Advanced and Simplo Technology into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between New Advanced Electronics and Simplo Technology Co, you can compare the effects of market volatilities on New Advanced and Simplo 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 New Advanced with a short position of Simplo Technology. Check out your portfolio center. Please also check ongoing floating volatility patterns of New Advanced and Simplo Technology.
Diversification Opportunities for New Advanced and Simplo Technology
-0.43 | Correlation Coefficient |
Very good diversification
The 3 months correlation between New and Simplo is -0.43. Overlapping area represents the amount of risk that can be diversified away by holding New Advanced Electronics and Simplo Technology Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Simplo Technology and New Advanced 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 New Advanced Electronics are associated (or correlated) with Simplo Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Simplo Technology has no effect on the direction of New Advanced i.e., New Advanced and Simplo Technology go up and down completely randomly.
Pair Corralation between New Advanced and Simplo Technology
Assuming the 90 days trading horizon New Advanced Electronics is expected to under-perform the Simplo Technology. But the stock apears to be less risky and, when comparing its historical volatility, New Advanced Electronics is 1.09 times less risky than Simplo Technology. The stock trades about -0.11 of its potential returns per unit of risk. The Simplo Technology Co is currently generating about -0.02 of returns per unit of risk over similar time horizon. If you would invest 41,850 in Simplo Technology Co on September 5, 2024 and sell it today you would lose (2,750) from holding Simplo Technology Co or give up 6.57% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Very Weak |
Accuracy | 99.21% |
Values | Daily Returns |
New Advanced Electronics vs. Simplo Technology Co
Performance |
Timeline |
New Advanced Electronics |
Simplo Technology |
New Advanced and Simplo Technology Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with New Advanced and Simplo Technology
The main advantage of trading using opposite New Advanced and Simplo Technology positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if New Advanced position performs unexpectedly, Simplo 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 Simplo Technology will offset losses from the drop in Simplo Technology's long position.New Advanced vs. Simplo Technology Co | New Advanced vs. Maxigen Biotech | New Advanced vs. Alchip Technologies | New Advanced vs. Ichia Technologies |
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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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.
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