Correlation Between Sitronix Technology and Sercomm Corp
Can any of the company-specific risk be diversified away by investing in both Sitronix Technology and Sercomm Corp 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 Sercomm Corp 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 Sercomm Corp, you can compare the effects of market volatilities on Sitronix Technology and Sercomm Corp 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 Sercomm Corp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sitronix Technology and Sercomm Corp.
Diversification Opportunities for Sitronix Technology and Sercomm Corp
0.47 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Sitronix and Sercomm is 0.47. Overlapping area represents the amount of risk that can be diversified away by holding Sitronix Technology Corp and Sercomm Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sercomm Corp 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 Sercomm Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sercomm Corp has no effect on the direction of Sitronix Technology i.e., Sitronix Technology and Sercomm Corp go up and down completely randomly.
Pair Corralation between Sitronix Technology and Sercomm Corp
Assuming the 90 days trading horizon Sitronix Technology Corp is expected to under-perform the Sercomm Corp. But the stock apears to be less risky and, when comparing its historical volatility, Sitronix Technology Corp is 1.09 times less risky than Sercomm Corp. The stock trades about -0.09 of its potential returns per unit of risk. The Sercomm Corp is currently generating about -0.02 of returns per unit of risk over similar time horizon. If you would invest 11,900 in Sercomm Corp on September 1, 2024 and sell it today you would lose (1,000.00) from holding Sercomm Corp or give up 8.4% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 99.22% |
| Values | Daily Returns |
Sitronix Technology Corp vs. Sercomm Corp
Performance |
| Timeline |
| Sitronix Technology Corp |
| Sercomm Corp |
Sitronix Technology and Sercomm Corp Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sitronix Technology and Sercomm Corp
The main advantage of trading using opposite Sitronix Technology and Sercomm Corp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sitronix Technology position performs unexpectedly, Sercomm Corp 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 Sercomm Corp will offset losses from the drop in Sercomm Corp's long position.The idea behind Sitronix Technology Corp and Sercomm Corp 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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.
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