Correlation Between Sirtec International and Higher Way
Can any of the company-specific risk be diversified away by investing in both Sirtec International and Higher Way 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 Sirtec International and Higher Way into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Sirtec International Co and Higher Way Electronic, you can compare the effects of market volatilities on Sirtec International and Higher Way 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 Sirtec International with a short position of Higher Way. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sirtec International and Higher Way.
Diversification Opportunities for Sirtec International and Higher Way
0.36 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Sirtec and Higher is 0.36. Overlapping area represents the amount of risk that can be diversified away by holding Sirtec International Co and Higher Way Electronic in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Higher Way Electronic and Sirtec International 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 Sirtec International Co are associated (or correlated) with Higher Way. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Higher Way Electronic has no effect on the direction of Sirtec International i.e., Sirtec International and Higher Way go up and down completely randomly.
Pair Corralation between Sirtec International and Higher Way
Assuming the 90 days trading horizon Sirtec International Co is expected to generate 0.54 times more return on investment than Higher Way. However, Sirtec International Co is 1.87 times less risky than Higher Way. It trades about 0.09 of its potential returns per unit of risk. Higher Way Electronic is currently generating about 0.02 per unit of risk. If you would invest 1,840 in Sirtec International Co on September 12, 2024 and sell it today you would earn a total of 1,370 from holding Sirtec International Co or generate 74.46% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Sirtec International Co vs. Higher Way Electronic
Performance |
| Timeline |
| Sirtec International |
| Higher Way Electronic |
Sirtec International and Higher Way Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sirtec International and Higher Way
The main advantage of trading using opposite Sirtec International and Higher Way positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sirtec International position performs unexpectedly, Higher Way 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 Higher Way will offset losses from the drop in Higher Way's long position.The idea behind Sirtec International Co and Higher Way Electronic pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.
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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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.
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