Correlation Between SIMMTECH and ITM Semiconductor
Can any of the company-specific risk be diversified away by investing in both SIMMTECH and ITM Semiconductor 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 SIMMTECH and ITM Semiconductor into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between SIMMTECH Co and ITM Semiconductor Co, you can compare the effects of market volatilities on SIMMTECH and ITM Semiconductor 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 SIMMTECH with a short position of ITM Semiconductor. Check out your portfolio center. Please also check ongoing floating volatility patterns of SIMMTECH and ITM Semiconductor.
Diversification Opportunities for SIMMTECH and ITM Semiconductor
0.91 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between SIMMTECH and ITM is 0.91. Overlapping area represents the amount of risk that can be diversified away by holding SIMMTECH Co and ITM Semiconductor Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ITM Semiconductor and SIMMTECH 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 SIMMTECH Co are associated (or correlated) with ITM Semiconductor. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ITM Semiconductor has no effect on the direction of SIMMTECH i.e., SIMMTECH and ITM Semiconductor go up and down completely randomly.
Pair Corralation between SIMMTECH and ITM Semiconductor
Assuming the 90 days trading horizon SIMMTECH Co is expected to under-perform the ITM Semiconductor. In addition to that, SIMMTECH is 1.27 times more volatile than ITM Semiconductor Co. It trades about -0.31 of its total potential returns per unit of risk. ITM Semiconductor Co is currently generating about -0.37 per unit of volatility. If you would invest 2,315,000 in ITM Semiconductor Co on September 12, 2024 and sell it today you would lose (915,000) from holding ITM Semiconductor Co or give up 39.52% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Very Strong |
Accuracy | 100.0% |
Values | Daily Returns |
SIMMTECH Co vs. ITM Semiconductor Co
Performance |
Timeline |
SIMMTECH |
ITM Semiconductor |
SIMMTECH and ITM Semiconductor Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with SIMMTECH and ITM Semiconductor
The main advantage of trading using opposite SIMMTECH and ITM Semiconductor positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SIMMTECH position performs unexpectedly, ITM Semiconductor 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 ITM Semiconductor will offset losses from the drop in ITM Semiconductor's long position.SIMMTECH vs. Cube Entertainment | SIMMTECH vs. Dreamus Company | SIMMTECH vs. LG Energy Solution | SIMMTECH vs. Dongwon System |
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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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.
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