Correlation Between STL Technology and Solid State
Can any of the company-specific risk be diversified away by investing in both STL Technology and Solid State 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 STL Technology and Solid State into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between STL Technology Co and Solid State System, you can compare the effects of market volatilities on STL Technology and Solid State 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 STL Technology with a short position of Solid State. Check out your portfolio center. Please also check ongoing floating volatility patterns of STL Technology and Solid State.
Diversification Opportunities for STL Technology and Solid State
-0.47 | Correlation Coefficient |
Very good diversification
The 3 months correlation between STL and Solid is -0.47. Overlapping area represents the amount of risk that can be diversified away by holding STL Technology Co and Solid State System in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Solid State System and STL Technology 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 STL Technology Co are associated (or correlated) with Solid State. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Solid State System has no effect on the direction of STL Technology i.e., STL Technology and Solid State go up and down completely randomly.
Pair Corralation between STL Technology and Solid State
Assuming the 90 days trading horizon STL Technology Co is expected to generate 2.45 times more return on investment than Solid State. However, STL Technology is 2.45 times more volatile than Solid State System. It trades about 0.6 of its potential returns per unit of risk. Solid State System is currently generating about -0.15 per unit of risk. If you would invest 3,455 in STL Technology Co on September 2, 2024 and sell it today you would earn a total of 2,595 from holding STL Technology Co or generate 75.11% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
STL Technology Co vs. Solid State System
Performance |
| Timeline |
| STL Technology |
| Solid State System |
STL Technology and Solid State Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with STL Technology and Solid State
The main advantage of trading using opposite STL Technology and Solid State positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if STL Technology position performs unexpectedly, Solid State 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 Solid State will offset losses from the drop in Solid State's long position.| STL Technology vs. Simplo Technology Co | STL Technology vs. Dynapack International Technology | STL Technology vs. Celxpert Energy | STL Technology vs. C Tech United |
| Solid State vs. Microtips Technology | Solid State vs. Te Chang Construction | Solid State vs. STL Technology Co | Solid State vs. Kindom Construction 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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.
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