Correlation Between SATO Technologies and Rocky Mountain
Can any of the company-specific risk be diversified away by investing in both SATO Technologies and Rocky Mountain 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 SATO Technologies and Rocky Mountain into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between SATO Technologies Corp and Rocky Mountain Liquor, you can compare the effects of market volatilities on SATO Technologies and Rocky Mountain 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 SATO Technologies with a short position of Rocky Mountain. Check out your portfolio center. Please also check ongoing floating volatility patterns of SATO Technologies and Rocky Mountain.
Diversification Opportunities for SATO Technologies and Rocky Mountain
0.24 | Correlation Coefficient |
Modest diversification
The 3 months correlation between SATO and Rocky is 0.24. Overlapping area represents the amount of risk that can be diversified away by holding SATO Technologies Corp and Rocky Mountain Liquor in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Rocky Mountain Liquor and SATO Technologies 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 SATO Technologies Corp are associated (or correlated) with Rocky Mountain. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Rocky Mountain Liquor has no effect on the direction of SATO Technologies i.e., SATO Technologies and Rocky Mountain go up and down completely randomly.
Pair Corralation between SATO Technologies and Rocky Mountain
Assuming the 90 days trading horizon SATO Technologies Corp is expected to under-perform the Rocky Mountain. In addition to that, SATO Technologies is 1.43 times more volatile than Rocky Mountain Liquor. It trades about -0.32 of its total potential returns per unit of risk. Rocky Mountain Liquor is currently generating about -0.12 per unit of volatility. If you would invest 13.00 in Rocky Mountain Liquor on September 12, 2024 and sell it today you would lose (2.00) from holding Rocky Mountain Liquor or give up 15.38% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
SATO Technologies Corp vs. Rocky Mountain Liquor
Performance |
| Timeline |
| SATO Technologies Corp |
| Rocky Mountain Liquor |
SATO Technologies and Rocky Mountain Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SATO Technologies and Rocky Mountain
The main advantage of trading using opposite SATO Technologies and Rocky Mountain positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SATO Technologies position performs unexpectedly, Rocky Mountain 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 Rocky Mountain will offset losses from the drop in Rocky Mountain's long position.| SATO Technologies vs. Brompton Lifeco Split | SATO Technologies vs. North American Financial | SATO Technologies vs. Prime Dividend Corp | SATO Technologies vs. Financial 15 Split |
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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 CEOs Directory module to screen CEOs from public companies around the world.
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