Correlation Between Sensortek Technology and Otsuka Information
Can any of the company-specific risk be diversified away by investing in both Sensortek Technology and Otsuka Information 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 Sensortek Technology and Otsuka Information into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Sensortek Technology Corp and Otsuka Information Technology, you can compare the effects of market volatilities on Sensortek Technology and Otsuka Information 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 Sensortek Technology with a short position of Otsuka Information. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sensortek Technology and Otsuka Information.
Diversification Opportunities for Sensortek Technology and Otsuka Information
-0.4 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Sensortek and Otsuka is -0.4. Overlapping area represents the amount of risk that can be diversified away by holding Sensortek Technology Corp and Otsuka Information Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Otsuka Information and Sensortek 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 Sensortek Technology Corp are associated (or correlated) with Otsuka Information. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Otsuka Information has no effect on the direction of Sensortek Technology i.e., Sensortek Technology and Otsuka Information go up and down completely randomly.
Pair Corralation between Sensortek Technology and Otsuka Information
Assuming the 90 days trading horizon Sensortek Technology is expected to generate 3.36 times less return on investment than Otsuka Information. But when comparing it to its historical volatility, Sensortek Technology Corp is 1.79 times less risky than Otsuka Information. It trades about 0.12 of its potential returns per unit of risk. Otsuka Information Technology is currently generating about 0.22 of returns per unit of risk over similar time horizon. If you would invest 14,800 in Otsuka Information Technology on September 1, 2024 and sell it today you would earn a total of 2,100 from holding Otsuka Information Technology or generate 14.19% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 95.65% |
| Values | Daily Returns |
Sensortek Technology Corp vs. Otsuka Information Technology
Performance |
| Timeline |
| Sensortek Technology Corp |
| Otsuka Information |
Sensortek Technology and Otsuka Information Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sensortek Technology and Otsuka Information
The main advantage of trading using opposite Sensortek Technology and Otsuka Information positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sensortek Technology position performs unexpectedly, Otsuka Information 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 Otsuka Information will offset losses from the drop in Otsuka Information's long position.| Sensortek Technology vs. Hon Hai Precision | Sensortek Technology vs. Delta Electronics | Sensortek Technology vs. LARGAN Precision Co | Sensortek Technology vs. Yageo Corp |
| Otsuka Information vs. Lihtai Construction Enterprise | Otsuka Information vs. Oceanic Beverages Co | Otsuka Information vs. Arbor Technology | Otsuka Information vs. Asmedia Technology |
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 Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
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