Correlation Between SIMS METAL and FANDIFI TECHNOLOGY
Can any of the company-specific risk be diversified away by investing in both SIMS METAL and FANDIFI 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 SIMS METAL and FANDIFI TECHNOLOGY into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between SIMS METAL MGT and FANDIFI TECHNOLOGY P, you can compare the effects of market volatilities on SIMS METAL and FANDIFI 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 SIMS METAL with a short position of FANDIFI TECHNOLOGY. Check out your portfolio center. Please also check ongoing floating volatility patterns of SIMS METAL and FANDIFI TECHNOLOGY.
Diversification Opportunities for SIMS METAL and FANDIFI TECHNOLOGY
0.0 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between SIMS and FANDIFI is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding SIMS METAL MGT and FANDIFI TECHNOLOGY P in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on FANDIFI TECHNOLOGY and SIMS METAL 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 SIMS METAL MGT are associated (or correlated) with FANDIFI TECHNOLOGY. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of FANDIFI TECHNOLOGY has no effect on the direction of SIMS METAL i.e., SIMS METAL and FANDIFI TECHNOLOGY go up and down completely randomly.
Pair Corralation between SIMS METAL and FANDIFI TECHNOLOGY
If you would invest 795.00 in SIMS METAL MGT on August 29, 2024 and sell it today you would earn a total of 15.00 from holding SIMS METAL MGT or generate 1.89% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Flat |
| Strength | Insignificant |
| Accuracy | 95.45% |
| Values | Daily Returns |
SIMS METAL MGT vs. FANDIFI TECHNOLOGY P
Performance |
| Timeline |
| SIMS METAL MGT |
| FANDIFI TECHNOLOGY |
SIMS METAL and FANDIFI TECHNOLOGY Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SIMS METAL and FANDIFI TECHNOLOGY
The main advantage of trading using opposite SIMS METAL and FANDIFI TECHNOLOGY positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SIMS METAL position performs unexpectedly, FANDIFI 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 FANDIFI TECHNOLOGY will offset losses from the drop in FANDIFI TECHNOLOGY's long position.The idea behind SIMS METAL MGT and FANDIFI TECHNOLOGY P 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.| FANDIFI TECHNOLOGY vs. CANON MARKETING JP | FANDIFI TECHNOLOGY vs. Salesforce | FANDIFI TECHNOLOGY vs. Vastned Retail NV | FANDIFI TECHNOLOGY vs. RETAIL FOOD GROUP |
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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
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