Correlation Between CoAsia Microelectronics and Sitronix Technology

Can any of the company-specific risk be diversified away by investing in both CoAsia Microelectronics and Sitronix Technology 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 CoAsia Microelectronics and Sitronix Technology into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between CoAsia Microelectronics and Sitronix Technology Corp, you can compare the effects of market volatilities on CoAsia Microelectronics and Sitronix Technology 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 CoAsia Microelectronics with a short position of Sitronix Technology. Check out your portfolio center. Please also check ongoing floating volatility patterns of CoAsia Microelectronics and Sitronix Technology.

Diversification Opportunities for CoAsia Microelectronics and Sitronix Technology

0.34

Correlation Coefficient

CoAsia Microelectronics  Sitronix Technology

Weak diversification

The 3 months correlation between CoAsia and Sitronix is 0.34. Overlapping area represents the amount of risk that can be diversified away by holding CoAsia Microelectronics and Sitronix Technology Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sitronix Technology Corp and CoAsia Microelectronics 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 CoAsia Microelectronics are associated (or correlated) with Sitronix Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sitronix Technology Corp has no effect on the direction of CoAsia Microelectronics i.e., CoAsia Microelectronics and Sitronix Technology go up and down completely randomly.

Pair Corralation between CoAsia Microelectronics and Sitronix Technology

Assuming the 90 days trading horizon CoAsia Microelectronics is expected to under-perform the Sitronix Technology. In addition to that, CoAsia Microelectronics is 2.08 times more volatile than Sitronix Technology Corp. It trades about -0.09 of its total potential returns per unit of risk. Sitronix Technology Corp is currently generating about -0.02 per unit of volatility. If you would invest  21,550  in Sitronix Technology Corp on September 5, 2024 and sell it today you would lose (450.00) from holding Sitronix Technology Corp or give up 2.09% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

CoAsia Microelectronics  vs.  Sitronix Technology Corp

CoAsia Microelectronics

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days CoAsia Microelectronics has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of abnormal performance in the last few months, the Stock's basic indicators remain fairly stable which may send shares a bit higher in January 2025. The latest fuss may also be a sign of long-term up-swing for the venture sophisticated investors.

Sitronix Technology Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Sitronix Technology Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable basic indicators, Sitronix Technology is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Pair Trading with CoAsia Microelectronics and Sitronix Technology

The main advantage of trading using opposite CoAsia Microelectronics and Sitronix Technology positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CoAsia Microelectronics position performs unexpectedly, Sitronix Technology 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 Sitronix Technology will offset losses from the drop in Sitronix Technology's long position.

The idea behind CoAsia Microelectronics and Sitronix Technology Corp pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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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 Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.