Correlation Between Sono Tek and Mind Technology

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

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

Diversification Opportunities for Sono Tek and Mind Technology

0.03

Correlation Coefficient

Sono Tek  Mind Technology

Significant diversification

The 3 months correlation between Sono and Mind is 0.03. Overlapping area represents the amount of risk that can be diversified away by holding Sono Tek Corp and Mind Technology Pref in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mind Technology Pref and Sono Tek 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 Sono Tek Corp are associated (or correlated) with Mind Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mind Technology Pref has no effect on the direction of Sono Tek i.e., Sono Tek and Mind Technology go up and down completely randomly.

Pair Corralation between Sono Tek and Mind Technology

If you would invest  434.00  in Sono Tek Corp on September 12, 2024 and sell it today you would earn a total of  17.00  from holding Sono Tek Corp or generate 3.92% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	0.0%
Values	Daily Returns

Sono Tek Corp  vs.  Mind Technology Pref

Sono Tek Corp

Risk-Adjusted Performance

2 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Sono Tek Corp are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite quite persistent basic indicators, Sono Tek is not utilizing all of its potentials. The current stock price mess, may contribute to short-term losses for the institutional investors.

Mind Technology Pref

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Mind Technology Pref has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable fundamental indicators, Mind Technology is not utilizing all of its potentials. The current stock price agitation, may contribute to short-term losses for the retail investors.

Pair Trading with Sono Tek and Mind Technology

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

The idea behind Sono Tek Corp and Mind Technology Pref 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 Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.