Correlation Between Digital China and SIM Technology
Can any of the company-specific risk be diversified away by investing in both Digital China 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 Digital China and SIM Technology into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Digital China Holdings and SIM Technology Group, you can compare the effects of market volatilities on Digital China 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 Digital China with a short position of SIM Technology. Check out your portfolio center. Please also check ongoing floating volatility patterns of Digital China and SIM Technology.
Diversification Opportunities for Digital China and SIM Technology
0.14 | Correlation Coefficient |
Average diversification
The 3 months correlation between Digital and SIM is 0.14. Overlapping area represents the amount of risk that can be diversified away by holding Digital China Holdings 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 Digital China 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 Digital China Holdings 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 Digital China i.e., Digital China and SIM Technology go up and down completely randomly.
Pair Corralation between Digital China and SIM Technology
Assuming the 90 days trading horizon Digital China Holdings is expected to generate 1.63 times more return on investment than SIM Technology. However, Digital China is 1.63 times more volatile than SIM Technology Group. It trades about 0.36 of its potential returns per unit of risk. SIM Technology Group is currently generating about 0.1 per unit of risk. If you would invest 568.00 in Digital China Holdings on September 4, 2024 and sell it today you would earn a total of 167.00 from holding Digital China Holdings or generate 29.4% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Digital China Holdings vs. SIM Technology Group
Performance |
| Timeline |
| Digital China Holdings |
| SIM Technology Group |
Digital China and SIM Technology Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Digital China and SIM Technology
The main advantage of trading using opposite Digital China and SIM Technology positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Digital China 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.| Digital China vs. Ju Teng International | Digital China vs. Neo Neon Holdings Limited | Digital China vs. Medtecs International | Digital China vs. Vietnam Manufacturing and |
| SIM Technology vs. Accton Technology Corp | SIM Technology vs. Wistron NeWeb Corp | SIM Technology vs. Alpha Networks | SIM Technology vs. Gemtek Technology Co |
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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.
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