Correlation Between I Tech and Simris Alg

Can any of the company-specific risk be diversified away by investing in both I Tech and Simris Alg 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 I Tech and Simris Alg into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between I Tech and Simris Alg AB, you can compare the effects of market volatilities on I Tech and Simris Alg 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 I Tech with a short position of Simris Alg. Check out your portfolio center. Please also check ongoing floating volatility patterns of I Tech and Simris Alg.

Diversification Opportunities for I Tech and Simris Alg

0.33

Correlation Coefficient

I Tech  Simris Alg

Weak diversification

The 3 months correlation between ITECH and Simris is 0.33. Overlapping area represents the amount of risk that can be diversified away by holding I Tech and Simris Alg AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Simris Alg AB and I Tech 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 I Tech are associated (or correlated) with Simris Alg. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Simris Alg AB has no effect on the direction of I Tech i.e., I Tech and Simris Alg go up and down completely randomly.

Pair Corralation between I Tech and Simris Alg

Assuming the 90 days trading horizon I Tech is expected to generate 0.28 times more return on investment than Simris Alg. However, I Tech is 3.63 times less risky than Simris Alg. It trades about 0.05 of its potential returns per unit of risk. Simris Alg AB is currently generating about -0.05 per unit of risk. If you would invest  4,700  in I Tech on September 3, 2024 and sell it today you would earn a total of  260.00  from holding I Tech or generate 5.53% return on investment over 90 days.

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

I Tech  vs.  Simris Alg AB

I Tech

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in I Tech are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak basic indicators, I Tech may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Simris Alg AB

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Simris Alg AB has generated negative risk-adjusted returns adding no value to investors with long positions. Despite uncertain performance in the last few months, the Stock's forward indicators remain somewhat strong which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with I Tech and Simris Alg

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

The idea behind I Tech and Simris Alg AB 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 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.