Correlation Between Simplo Technology and Liton Technology
Can any of the company-specific risk be diversified away by investing in both Simplo Technology and Liton 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 Simplo Technology and Liton Technology into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Simplo Technology Co and Liton Technology, you can compare the effects of market volatilities on Simplo Technology and Liton 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 Simplo Technology with a short position of Liton Technology. Check out your portfolio center. Please also check ongoing floating volatility patterns of Simplo Technology and Liton Technology.
Diversification Opportunities for Simplo Technology and Liton Technology
0.63 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Simplo and Liton is 0.63. Overlapping area represents the amount of risk that can be diversified away by holding Simplo Technology Co and Liton Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Liton Technology and Simplo 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 Simplo Technology Co are associated (or correlated) with Liton Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Liton Technology has no effect on the direction of Simplo Technology i.e., Simplo Technology and Liton Technology go up and down completely randomly.
Pair Corralation between Simplo Technology and Liton Technology
Assuming the 90 days trading horizon Simplo Technology is expected to generate 1.7 times less return on investment than Liton Technology. In addition to that, Simplo Technology is 1.06 times more volatile than Liton Technology. It trades about 0.16 of its total potential returns per unit of risk. Liton Technology is currently generating about 0.29 per unit of volatility. If you would invest 3,490 in Liton Technology on August 30, 2024 and sell it today you would earn a total of 635.00 from holding Liton Technology or generate 18.19% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Simplo Technology Co vs. Liton Technology
Performance |
| Timeline |
| Simplo Technology |
| Liton Technology |
Simplo Technology and Liton Technology Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Simplo Technology and Liton Technology
The main advantage of trading using opposite Simplo Technology and Liton Technology positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Simplo Technology position performs unexpectedly, Liton 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 Liton Technology will offset losses from the drop in Liton Technology's long position.| Simplo Technology vs. Dynapack International Technology | Simplo Technology vs. Catcher Technology Co | Simplo Technology vs. Delta Electronics | Simplo Technology vs. Powertech Technology |
| Liton Technology vs. Prosperity Dielectrics Co | Liton Technology vs. Lelon Electronics Corp | Liton Technology vs. Wafer Works | Liton Technology vs. INPAQ Technology Co |
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 Bonds Directory module to find actively traded corporate debentures issued by US companies.
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