Correlation Between Nortech Systems and SigmaTron International
Can any of the company-specific risk be diversified away by investing in both Nortech Systems 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 Nortech Systems and SigmaTron International into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Nortech Systems Incorporated and SigmaTron International, you can compare the effects of market volatilities on Nortech Systems 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 Nortech Systems with a short position of SigmaTron International. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nortech Systems and SigmaTron International.
Diversification Opportunities for Nortech Systems and SigmaTron International
0.39 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Nortech and SigmaTron is 0.39. Overlapping area represents the amount of risk that can be diversified away by holding Nortech Systems Incorporated and SigmaTron International in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SigmaTron International and Nortech Systems 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 Nortech Systems Incorporated 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 Nortech Systems i.e., Nortech Systems and SigmaTron International go up and down completely randomly.
Pair Corralation between Nortech Systems and SigmaTron International
Given the investment horizon of 90 days Nortech Systems Incorporated is expected to under-perform the SigmaTron International. But the stock apears to be less risky and, when comparing its historical volatility, Nortech Systems Incorporated is 1.42 times less risky than SigmaTron International. The stock trades about 0.0 of its potential returns per unit of risk. The SigmaTron International is currently generating about 0.0 of returns per unit of risk over similar time horizon. If you would invest 519.00 in SigmaTron International on August 29, 2024 and sell it today you would lose (241.00) from holding SigmaTron International or give up 46.44% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Nortech Systems Incorporated vs. SigmaTron International
Performance |
| Timeline |
| Nortech Systems |
| SigmaTron International |
Nortech Systems and SigmaTron International Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Nortech Systems and SigmaTron International
The main advantage of trading using opposite Nortech Systems and SigmaTron International positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Nortech Systems 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.| Nortech Systems vs. Neuropace | Nortech Systems vs. Electromed | Nortech Systems vs. Orthopediatrics Corp | Nortech Systems vs. SurModics |
| 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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.
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