Correlation Between Simat Technologies and Premier Technology

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

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

Diversification Opportunities for Simat Technologies and Premier Technology

0.34

Correlation Coefficient

Simat Technologies  Premier Technology

Weak diversification

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

Pair Corralation between Simat Technologies and Premier Technology

Assuming the 90 days trading horizon Simat Technologies Public is expected to under-perform the Premier Technology. In addition to that, Simat Technologies is 5.56 times more volatile than Premier Technology Public. It trades about 0.0 of its total potential returns per unit of risk. Premier Technology Public is currently generating about 0.01 per unit of volatility. If you would invest  940.00  in Premier Technology Public on September 13, 2024 and sell it today you would earn a total of  5.00  from holding Premier Technology Public or generate 0.53% return on investment over 90 days.

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

Simat Technologies Public  vs.  Premier Technology Public

Simat Technologies Public

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Simat Technologies Public has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong fundamental drivers, Simat Technologies is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Premier Technology Public

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Premier Technology Public are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite quite persistent fundamental drivers, Premier Technology is not utilizing all of its potentials. The latest stock price mess, may contribute to short-term losses for the institutional investors.

Pair Trading with Simat Technologies and Premier Technology

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

The idea behind Simat Technologies Public and Premier Technology Public 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 Transaction History module to view history of all your transactions and understand their impact on performance.