Correlation Between Sitronix Technology and Sinher Technology
Can any of the company-specific risk be diversified away by investing in both Sitronix Technology and Sinher 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 Sitronix Technology and Sinher Technology 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 Sinher Technology, you can compare the effects of market volatilities on Sitronix Technology and Sinher 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 Sitronix Technology with a short position of Sinher Technology. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sitronix Technology and Sinher Technology.
Diversification Opportunities for Sitronix Technology and Sinher Technology
0.49 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Sitronix and Sinher is 0.49. Overlapping area represents the amount of risk that can be diversified away by holding Sitronix Technology Corp and Sinher Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sinher Technology 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 Sinher Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sinher Technology has no effect on the direction of Sitronix Technology i.e., Sitronix Technology and Sinher Technology go up and down completely randomly.
Pair Corralation between Sitronix Technology and Sinher Technology
Assuming the 90 days trading horizon Sitronix Technology Corp is expected to generate 1.03 times more return on investment than Sinher Technology. However, Sitronix Technology is 1.03 times more volatile than Sinher Technology. It trades about -0.23 of its potential returns per unit of risk. Sinher Technology is currently generating about -0.24 per unit of risk. If you would invest 22,200 in Sitronix Technology Corp on September 1, 2024 and sell it today you would lose (1,500) from holding Sitronix Technology Corp or give up 6.76% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 95.65% |
| Values | Daily Returns |
Sitronix Technology Corp vs. Sinher Technology
Performance |
| Timeline |
| Sitronix Technology Corp |
| Sinher Technology |
Sitronix Technology and Sinher Technology Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sitronix Technology and Sinher Technology
The main advantage of trading using opposite Sitronix Technology and Sinher Technology positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sitronix Technology position performs unexpectedly, Sinher 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 Sinher Technology will offset losses from the drop in Sinher Technology's long position.The idea behind Sitronix Technology Corp and Sinher Technology 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 Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.
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