Correlation Between Sitronix Technology and Acer
Can any of the company-specific risk be diversified away by investing in both Sitronix Technology and Acer 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 Sitronix Technology and Acer into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Sitronix Technology Corp and Acer Inc, you can compare the effects of market volatilities on Sitronix Technology and Acer 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 Sitronix Technology with a short position of Acer. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sitronix Technology and Acer.
Diversification Opportunities for Sitronix Technology and Acer
0.62 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Sitronix and Acer is 0.62. Overlapping area represents the amount of risk that can be diversified away by holding Sitronix Technology Corp and Acer Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Acer Inc and Sitronix 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 Sitronix Technology Corp are associated (or correlated) with Acer. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Acer Inc has no effect on the direction of Sitronix Technology i.e., Sitronix Technology and Acer go up and down completely randomly.
Pair Corralation between Sitronix Technology and Acer
Assuming the 90 days trading horizon Sitronix Technology Corp is expected to under-perform the Acer. But the stock apears to be less risky and, when comparing its historical volatility, Sitronix Technology Corp is 1.23 times less risky than Acer. The stock trades about -0.23 of its potential returns per unit of risk. The Acer Inc is currently generating about -0.17 of returns per unit of risk over similar time horizon. If you would invest 4,045 in Acer Inc on September 1, 2024 and sell it today you would lose (260.00) from holding Acer Inc or give up 6.43% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Sitronix Technology Corp vs. Acer Inc
Performance |
| Timeline |
| Sitronix Technology Corp |
| Acer Inc |
Sitronix Technology and Acer Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sitronix Technology and Acer
The main advantage of trading using opposite Sitronix Technology and Acer positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sitronix Technology position performs unexpectedly, Acer 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 Acer will offset losses from the drop in Acer's long position.The idea behind Sitronix Technology Corp and Acer Inc 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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.
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