Correlation Between Solitron Devices and Surge Components
Can any of the company-specific risk be diversified away by investing in both Solitron Devices and Surge Components 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 Solitron Devices and Surge Components into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Solitron Devices and Surge Components, you can compare the effects of market volatilities on Solitron Devices and Surge Components 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 Solitron Devices with a short position of Surge Components. Check out your portfolio center. Please also check ongoing floating volatility patterns of Solitron Devices and Surge Components.
Diversification Opportunities for Solitron Devices and Surge Components
-0.31 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Solitron and Surge is -0.31. Overlapping area represents the amount of risk that can be diversified away by holding Solitron Devices and Surge Components in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Surge Components and Solitron Devices 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 Solitron Devices are associated (or correlated) with Surge Components. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Surge Components has no effect on the direction of Solitron Devices i.e., Solitron Devices and Surge Components go up and down completely randomly.
Pair Corralation between Solitron Devices and Surge Components
Given the investment horizon of 90 days Solitron Devices is expected to generate 0.8 times more return on investment than Surge Components. However, Solitron Devices is 1.25 times less risky than Surge Components. It trades about -0.02 of its potential returns per unit of risk. Surge Components is currently generating about -0.02 per unit of risk. If you would invest 1,849 in Solitron Devices on August 26, 2024 and sell it today you would lose (175.00) from holding Solitron Devices or give up 9.46% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Solitron Devices vs. Surge Components
Performance |
| Timeline |
| Solitron Devices |
| Surge Components |
Solitron Devices and Surge Components Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Solitron Devices and Surge Components
The main advantage of trading using opposite Solitron Devices and Surge Components positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Solitron Devices position performs unexpectedly, Surge Components 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 Surge Components will offset losses from the drop in Surge Components' long position.| Solitron Devices vs. Nova | Solitron Devices vs. inTest | Solitron Devices vs. Onto Innovation | Solitron Devices vs. Kulicke and Soffa |
| Surge Components vs. SCI Engineered Materials | Surge Components vs. Ieh Corp | Surge Components vs. Paragon Technologies | Surge Components vs. Solitron Devices |
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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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