Correlation Between Neo Neon and SIM Technology
Can any of the company-specific risk be diversified away by investing in both Neo Neon 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 Neo Neon and SIM Technology into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Neo Neon Holdings Limited and SIM Technology Group, you can compare the effects of market volatilities on Neo Neon 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 Neo Neon with a short position of SIM Technology. Check out your portfolio center. Please also check ongoing floating volatility patterns of Neo Neon and SIM Technology.
Diversification Opportunities for Neo Neon and SIM Technology
0.47 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Neo and SIM is 0.47. Overlapping area represents the amount of risk that can be diversified away by holding Neo Neon Holdings Limited 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 Neo Neon 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 Neo Neon Holdings Limited 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 Neo Neon i.e., Neo Neon and SIM Technology go up and down completely randomly.
Pair Corralation between Neo Neon and SIM Technology
Assuming the 90 days trading horizon Neo Neon is expected to generate 1.49 times less return on investment than SIM Technology. But when comparing it to its historical volatility, Neo Neon Holdings Limited is 1.15 times less risky than SIM Technology. It trades about 0.05 of its potential returns per unit of risk. SIM Technology Group is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest 221.00 in SIM Technology Group on November 3, 2024 and sell it today you would earn a total of 87.00 from holding SIM Technology Group or generate 39.37% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Neo Neon Holdings Limited vs. SIM Technology Group
Performance |
| Timeline |
| Neo Neon Holdings |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
| SIM Technology Group |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Weak
Neo Neon and SIM Technology Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Neo Neon and SIM Technology
The main advantage of trading using opposite Neo Neon and SIM Technology positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Neo Neon 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 Neo Neon Holdings Limited 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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.
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