Correlation Between Sonix Technology and FocalTech Systems
Can any of the company-specific risk be diversified away by investing in both Sonix Technology and FocalTech Systems 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 Sonix Technology and FocalTech Systems into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Sonix Technology Co and FocalTech Systems Co, you can compare the effects of market volatilities on Sonix Technology and FocalTech Systems 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 Sonix Technology with a short position of FocalTech Systems. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sonix Technology and FocalTech Systems.
Diversification Opportunities for Sonix Technology and FocalTech Systems
0.47 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Sonix and FocalTech is 0.47. Overlapping area represents the amount of risk that can be diversified away by holding Sonix Technology Co and FocalTech Systems Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on FocalTech Systems and Sonix 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 Sonix Technology Co are associated (or correlated) with FocalTech Systems. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of FocalTech Systems has no effect on the direction of Sonix Technology i.e., Sonix Technology and FocalTech Systems go up and down completely randomly.
Pair Corralation between Sonix Technology and FocalTech Systems
Assuming the 90 days trading horizon Sonix Technology Co is expected to under-perform the FocalTech Systems. But the stock apears to be less risky and, when comparing its historical volatility, Sonix Technology Co is 1.18 times less risky than FocalTech Systems. The stock trades about -0.12 of its potential returns per unit of risk. The FocalTech Systems Co is currently generating about 0.0 of returns per unit of risk over similar time horizon. If you would invest 8,570 in FocalTech Systems Co on August 30, 2024 and sell it today you would lose (40.00) from holding FocalTech Systems Co or give up 0.47% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Sonix Technology Co vs. FocalTech Systems Co
Performance |
| Timeline |
| Sonix Technology |
| FocalTech Systems |
Sonix Technology and FocalTech Systems Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sonix Technology and FocalTech Systems
The main advantage of trading using opposite Sonix Technology and FocalTech Systems positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sonix Technology position performs unexpectedly, FocalTech Systems 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 FocalTech Systems will offset losses from the drop in FocalTech Systems' long position.The idea behind Sonix Technology Co and FocalTech Systems Co 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.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 Portfolio Center module to all portfolio management and optimization tools to improve performance of your portfolios.
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