Correlation Between Sitronix Technology and Chipbond Technology
Can any of the company-specific risk be diversified away by investing in both Sitronix Technology and Chipbond 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 Chipbond 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 Chipbond Technology, you can compare the effects of market volatilities on Sitronix Technology and Chipbond 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 Chipbond Technology. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sitronix Technology and Chipbond Technology.
Diversification Opportunities for Sitronix Technology and Chipbond Technology
0.32 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Sitronix and Chipbond is 0.32. Overlapping area represents the amount of risk that can be diversified away by holding Sitronix Technology Corp and Chipbond Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Chipbond 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 Chipbond Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Chipbond Technology has no effect on the direction of Sitronix Technology i.e., Sitronix Technology and Chipbond Technology go up and down completely randomly.
Pair Corralation between Sitronix Technology and Chipbond Technology
Assuming the 90 days trading horizon Sitronix Technology Corp is expected to generate 1.52 times more return on investment than Chipbond Technology. However, Sitronix Technology is 1.52 times more volatile than Chipbond Technology. It trades about 0.03 of its potential returns per unit of risk. Chipbond Technology is currently generating about 0.02 per unit of risk. If you would invest 17,650 in Sitronix Technology Corp on September 3, 2024 and sell it today you would earn a total of 3,050 from holding Sitronix Technology Corp or generate 17.28% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Sitronix Technology Corp vs. Chipbond Technology
Performance |
| Timeline |
| Sitronix Technology Corp |
| Chipbond Technology |
Sitronix Technology and Chipbond Technology Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sitronix Technology and Chipbond Technology
The main advantage of trading using opposite Sitronix Technology and Chipbond Technology positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sitronix Technology position performs unexpectedly, Chipbond 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 Chipbond Technology will offset losses from the drop in Chipbond Technology's long position.| Sitronix Technology vs. Taiwan Semiconductor Manufacturing | Sitronix Technology vs. Yang Ming Marine | Sitronix Technology vs. ASE Industrial Holding | Sitronix Technology vs. AU Optronics |
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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