Correlation Between Flex and SigmaTron International
Can any of the company-specific risk be diversified away by investing in both Flex 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 Flex and SigmaTron International into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Flex and SigmaTron International, you can compare the effects of market volatilities on Flex 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 Flex with a short position of SigmaTron International. Check out your portfolio center. Please also check ongoing floating volatility patterns of Flex and SigmaTron International.
Diversification Opportunities for Flex and SigmaTron International
0.21 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Flex and SigmaTron is 0.21. Overlapping area represents the amount of risk that can be diversified away by holding Flex and SigmaTron International in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SigmaTron International and Flex 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 Flex 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 Flex i.e., Flex and SigmaTron International go up and down completely randomly.
Pair Corralation between Flex and SigmaTron International
Given the investment horizon of 90 days Flex is expected to generate 1.08 times more return on investment than SigmaTron International. However, Flex is 1.08 times more volatile than SigmaTron International. It trades about 0.2 of its potential returns per unit of risk. SigmaTron International is currently generating about -0.08 per unit of risk. If you would invest 3,520 in Flex on September 4, 2024 and sell it today you would earn a total of 402.00 from holding Flex or generate 11.42% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 95.24% |
| Values | Daily Returns |
Flex vs. SigmaTron International
Performance |
| Timeline |
| Flex |
| SigmaTron International |
Flex and SigmaTron International Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Flex and SigmaTron International
The main advantage of trading using opposite Flex and SigmaTron International positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Flex 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.The idea behind Flex and SigmaTron International 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.| 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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.
Other Complementary Tools
| Portfolio Dashboard Portfolio dashboard that provides centralized access to all your investments | |
| Performance Analysis Check effects of mean-variance optimization against your current asset allocation | |
| Bonds Directory Find actively traded corporate debentures issued by US companies | |
| CEOs Directory Screen CEOs from public companies around the world | |
| Equity Forecasting Use basic forecasting models to generate price predictions and determine price momentum |