Correlation Between Cal Comp and SIM Technology
Can any of the company-specific risk be diversified away by investing in both Cal Comp and SIM 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 Cal Comp and SIM Technology into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Cal Comp Electronics Public and SIM Technology Group, you can compare the effects of market volatilities on Cal Comp and SIM 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 Cal Comp with a short position of SIM Technology. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cal Comp and SIM Technology.
Diversification Opportunities for Cal Comp and SIM Technology
-0.32 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Cal and SIM is -0.32. Overlapping area represents the amount of risk that can be diversified away by holding Cal Comp Electronics Public and SIM Technology Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SIM Technology Group and Cal Comp 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 Cal Comp Electronics Public are associated (or correlated) with SIM Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SIM Technology Group has no effect on the direction of Cal Comp i.e., Cal Comp and SIM Technology go up and down completely randomly.
Pair Corralation between Cal Comp and SIM Technology
Assuming the 90 days trading horizon Cal Comp Electronics Public is expected to generate 1.11 times more return on investment than SIM Technology. However, Cal Comp is 1.11 times more volatile than SIM Technology Group. It trades about 0.11 of its potential returns per unit of risk. SIM Technology Group is currently generating about 0.06 per unit of risk. If you would invest 392.00 in Cal Comp Electronics Public on November 3, 2024 and sell it today you would earn a total of 448.00 from holding Cal Comp Electronics Public or generate 114.29% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Cal Comp Electronics Public vs. SIM Technology Group
Performance |
| Timeline |
| Cal Comp Electronics |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Good
| SIM Technology Group |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Weak
Cal Comp and SIM Technology Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Cal Comp and SIM Technology
The main advantage of trading using opposite Cal Comp and SIM Technology positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cal Comp position performs unexpectedly, SIM 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 SIM Technology will offset losses from the drop in SIM Technology's long position.The idea behind Cal Comp Electronics Public and SIM Technology Group 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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.
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