Correlation Between Sitronix Technology and Elite Material
Can any of the company-specific risk be diversified away by investing in both Sitronix Technology and Elite Material 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 Elite Material 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 Elite Material Co, you can compare the effects of market volatilities on Sitronix Technology and Elite Material 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 Elite Material. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sitronix Technology and Elite Material.
Diversification Opportunities for Sitronix Technology and Elite Material
-0.38 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Sitronix and Elite is -0.38. Overlapping area represents the amount of risk that can be diversified away by holding Sitronix Technology Corp and Elite Material Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Elite Material 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 Elite Material. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Elite Material has no effect on the direction of Sitronix Technology i.e., Sitronix Technology and Elite Material go up and down completely randomly.
Pair Corralation between Sitronix Technology and Elite Material
Assuming the 90 days trading horizon Sitronix Technology Corp is expected to under-perform the Elite Material. But the stock apears to be less risky and, when comparing its historical volatility, Sitronix Technology Corp is 1.47 times less risky than Elite Material. The stock trades about -0.09 of its potential returns per unit of risk. The Elite Material Co is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest 43,500 in Elite Material Co on September 1, 2024 and sell it today you would earn a total of 3,350 from holding Elite Material Co or generate 7.7% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Sitronix Technology Corp vs. Elite Material Co
Performance |
| Timeline |
| Sitronix Technology Corp |
| Elite Material |
Sitronix Technology and Elite Material Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sitronix Technology and Elite Material
The main advantage of trading using opposite Sitronix Technology and Elite Material positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sitronix Technology position performs unexpectedly, Elite Material 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 Elite Material will offset losses from the drop in Elite Material's long position.The idea behind Sitronix Technology Corp and Elite Material 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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.
Other Complementary Tools
| Equity Forecasting Use basic forecasting models to generate price predictions and determine price momentum | |
| Portfolio Volatility Check portfolio volatility and analyze historical return density to properly model market risk | |
| Transaction History View history of all your transactions and understand their impact on performance | |
| My Watchlist Analysis Analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like | |
| Premium Stories Follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope |