Correlation Between SAFETY MEDICAL and STORE ELECTRONIC
Can any of the company-specific risk be diversified away by investing in both SAFETY MEDICAL and STORE ELECTRONIC 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 SAFETY MEDICAL and STORE ELECTRONIC into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between SAFETY MEDICAL PROD and STORE ELECTRONIC, you can compare the effects of market volatilities on SAFETY MEDICAL and STORE ELECTRONIC 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 SAFETY MEDICAL with a short position of STORE ELECTRONIC. Check out your portfolio center. Please also check ongoing floating volatility patterns of SAFETY MEDICAL and STORE ELECTRONIC.
Diversification Opportunities for SAFETY MEDICAL and STORE ELECTRONIC
0.52 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between SAFETY and STORE is 0.52. Overlapping area represents the amount of risk that can be diversified away by holding SAFETY MEDICAL PROD and STORE ELECTRONIC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on STORE ELECTRONIC and SAFETY MEDICAL 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 SAFETY MEDICAL PROD are associated (or correlated) with STORE ELECTRONIC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of STORE ELECTRONIC has no effect on the direction of SAFETY MEDICAL i.e., SAFETY MEDICAL and STORE ELECTRONIC go up and down completely randomly.
Pair Corralation between SAFETY MEDICAL and STORE ELECTRONIC
Assuming the 90 days trading horizon SAFETY MEDICAL PROD is expected to under-perform the STORE ELECTRONIC. But the stock apears to be less risky and, when comparing its historical volatility, SAFETY MEDICAL PROD is 1.12 times less risky than STORE ELECTRONIC. The stock trades about -0.07 of its potential returns per unit of risk. The STORE ELECTRONIC is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 10,496 in STORE ELECTRONIC on September 1, 2024 and sell it today you would earn a total of 3,524 from holding STORE ELECTRONIC or generate 33.57% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
SAFETY MEDICAL PROD vs. STORE ELECTRONIC
Performance |
| Timeline |
| SAFETY MEDICAL PROD |
| STORE ELECTRONIC |
SAFETY MEDICAL and STORE ELECTRONIC Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SAFETY MEDICAL and STORE ELECTRONIC
The main advantage of trading using opposite SAFETY MEDICAL and STORE ELECTRONIC positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SAFETY MEDICAL position performs unexpectedly, STORE ELECTRONIC 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 STORE ELECTRONIC will offset losses from the drop in STORE ELECTRONIC's long position.| SAFETY MEDICAL vs. MOLSON RS BEVERAGE | SAFETY MEDICAL vs. Molson Coors Beverage | SAFETY MEDICAL vs. ADRIATIC METALS LS 013355 | SAFETY MEDICAL vs. United Insurance Holdings |
| STORE ELECTRONIC vs. CHIBA BANK | STORE ELECTRONIC vs. WESTLAKE CHEMICAL | STORE ELECTRONIC vs. Heartland Financial USA | STORE ELECTRONIC vs. Mitsui Chemicals |
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 File Import module to quickly import all of your third-party portfolios from your local drive in csv format.
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