Correlation Between Deswell Industries and SigmaTron International
Can any of the company-specific risk be diversified away by investing in both Deswell Industries and SigmaTron International 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 Deswell Industries and SigmaTron International into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Deswell Industries and SigmaTron International, you can compare the effects of market volatilities on Deswell Industries and SigmaTron International 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 Deswell Industries with a short position of SigmaTron International. Check out your portfolio center. Please also check ongoing floating volatility patterns of Deswell Industries and SigmaTron International.
Diversification Opportunities for Deswell Industries and SigmaTron International
0.83 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Deswell and SigmaTron is 0.83. Overlapping area represents the amount of risk that can be diversified away by holding Deswell Industries and SigmaTron International in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SigmaTron International and Deswell Industries 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 Deswell Industries are associated (or correlated) with SigmaTron International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SigmaTron International has no effect on the direction of Deswell Industries i.e., Deswell Industries and SigmaTron International go up and down completely randomly.
Pair Corralation between Deswell Industries and SigmaTron International
Given the investment horizon of 90 days Deswell Industries is expected to generate 0.29 times more return on investment than SigmaTron International. However, Deswell Industries is 3.5 times less risky than SigmaTron International. It trades about -0.01 of its potential returns per unit of risk. SigmaTron International is currently generating about -0.1 per unit of risk. If you would invest 239.00 in Deswell Industries on November 3, 2024 and sell it today you would lose (1.00) from holding Deswell Industries or give up 0.42% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Deswell Industries vs. SigmaTron International
Performance |
| Timeline |
| Deswell Industries |
| SigmaTron International |
Deswell Industries and SigmaTron International Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Deswell Industries and SigmaTron International
The main advantage of trading using opposite Deswell Industries and SigmaTron International positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Deswell Industries position performs unexpectedly, SigmaTron International 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 SigmaTron International will offset losses from the drop in SigmaTron International's long position.| Deswell Industries vs. Ieh Corp | Deswell Industries vs. LGL Group | Deswell Industries vs. SigmaTron International | Deswell Industries vs. Daktronics |
| SigmaTron International vs. Integrated Media Technology | SigmaTron International vs. Data IO | SigmaTron International vs. Research Frontiers Incorporated | SigmaTron International vs. Maris Tech |
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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.
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