Correlation Between STL Technology and Alchip Technologies
Can any of the company-specific risk be diversified away by investing in both STL Technology and Alchip Technologies 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 Alchip Technologies 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 Alchip Technologies, you can compare the effects of market volatilities on STL Technology and Alchip Technologies 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 Alchip Technologies. Check out your portfolio center. Please also check ongoing floating volatility patterns of STL Technology and Alchip Technologies.
Diversification Opportunities for STL Technology and Alchip Technologies
0.18 | Correlation Coefficient |
Average diversification
The 3 months correlation between STL and Alchip is 0.18. Overlapping area represents the amount of risk that can be diversified away by holding STL Technology Co and Alchip Technologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Alchip Technologies 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 Alchip Technologies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Alchip Technologies has no effect on the direction of STL Technology i.e., STL Technology and Alchip Technologies go up and down completely randomly.
Pair Corralation between STL Technology and Alchip Technologies
Assuming the 90 days trading horizon STL Technology is expected to generate 2.26 times less return on investment than Alchip Technologies. But when comparing it to its historical volatility, STL Technology Co is 1.42 times less risky than Alchip Technologies. It trades about 0.05 of its potential returns per unit of risk. Alchip Technologies is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest 83,900 in Alchip Technologies on September 3, 2024 and sell it today you would earn a total of 137,600 from holding Alchip Technologies or generate 164.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
STL Technology Co vs. Alchip Technologies
Performance |
| Timeline |
| STL Technology |
| Alchip Technologies |
STL Technology and Alchip Technologies Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with STL Technology and Alchip Technologies
The main advantage of trading using opposite STL Technology and Alchip Technologies positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if STL Technology position performs unexpectedly, Alchip Technologies 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 Alchip Technologies will offset losses from the drop in Alchip Technologies' long position.| STL Technology vs. Eclat Textile Co | STL Technology vs. WiseChip Semiconductor | STL Technology vs. Novatek Microelectronics Corp | STL Technology vs. Leader Electronics |
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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.
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