Correlation Between Step One and Technology One
Can any of the company-specific risk be diversified away by investing in both Step One and Technology One 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 Step One and Technology One into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Step One Clothing and Technology One, you can compare the effects of market volatilities on Step One and Technology One 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 Step One with a short position of Technology One. Check out your portfolio center. Please also check ongoing floating volatility patterns of Step One and Technology One.
Diversification Opportunities for Step One and Technology One
-0.78 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Step and Technology is -0.78. Overlapping area represents the amount of risk that can be diversified away by holding Step One Clothing and Technology One in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Technology One and Step One 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 Step One Clothing are associated (or correlated) with Technology One. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Technology One has no effect on the direction of Step One i.e., Step One and Technology One go up and down completely randomly.
Pair Corralation between Step One and Technology One
Assuming the 90 days trading horizon Step One Clothing is expected to under-perform the Technology One. In addition to that, Step One is 1.51 times more volatile than Technology One. It trades about -0.33 of its total potential returns per unit of risk. Technology One is currently generating about -0.02 per unit of volatility. If you would invest 3,053 in Technology One on October 14, 2024 and sell it today you would lose (18.00) from holding Technology One or give up 0.59% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Step One Clothing vs. Technology One
Performance |
| Timeline |
| Step One Clothing |
| Technology One |
Step One and Technology One Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Step One and Technology One
The main advantage of trading using opposite Step One and Technology One positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Step One position performs unexpectedly, Technology One 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 Technology One will offset losses from the drop in Technology One's long position.| Step One vs. Dicker Data | Step One vs. Metro Mining | Step One vs. DY6 Metals | Step One vs. National Storage REIT |
| Technology One vs. Step One Clothing | Technology One vs. Fisher Paykel Healthcare | Technology One vs. Legacy Iron Ore | Technology One vs. Queste Communications |
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 Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.
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