Correlation Between S P and Simat Technologies

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

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

Diversification Opportunities for S P and Simat Technologies

-0.49

Correlation Coefficient

S P  Simat Technologies

Very good diversification

The 3 months correlation between SPVI and Simat is -0.49. Overlapping area represents the amount of risk that can be diversified away by holding S P V and Simat Technologies Public in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Simat Technologies Public and S P 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 S P V are associated (or correlated) with Simat Technologies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Simat Technologies Public has no effect on the direction of S P i.e., S P and Simat Technologies go up and down completely randomly.

Pair Corralation between S P and Simat Technologies

Assuming the 90 days trading horizon S P V is expected to under-perform the Simat Technologies. But the stock apears to be less risky and, when comparing its historical volatility, S P V is 2.0 times less risky than Simat Technologies. The stock trades about -0.22 of its potential returns per unit of risk. The Simat Technologies Public is currently generating about -0.01 of returns per unit of risk over similar time horizon. If you would invest  174.00  in Simat Technologies Public on September 12, 2024 and sell it today you would lose (16.00) from holding Simat Technologies Public or give up 9.2% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	98.39%
Values	Daily Returns

S P V  vs.  Simat Technologies Public

S P V

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days S P V has generated negative risk-adjusted returns adding no value to investors with long positions. Despite conflicting performance in the last few months, the Stock's forward-looking signals remain quite persistent which may send shares a bit higher in January 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

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.

Pair Trading with S P and Simat Technologies

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

The idea behind S P V and Simat Technologies 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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.