Correlation Between Satcom Systems and Wilk Technologies

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

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

Diversification Opportunities for Satcom Systems and Wilk Technologies

-0.75

Correlation Coefficient

Satcom Systems  Wilk Technologies

Pay attention - limited upside

The 3 months correlation between Satcom and Wilk is -0.75. Overlapping area represents the amount of risk that can be diversified away by holding Satcom Systems and Wilk Technologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Wilk Technologies and Satcom Systems 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 Satcom Systems are associated (or correlated) with Wilk Technologies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Wilk Technologies has no effect on the direction of Satcom Systems i.e., Satcom Systems and Wilk Technologies go up and down completely randomly.

Pair Corralation between Satcom Systems and Wilk Technologies

Assuming the 90 days trading horizon Satcom Systems is expected to generate 0.51 times more return on investment than Wilk Technologies. However, Satcom Systems is 1.97 times less risky than Wilk Technologies. It trades about 0.14 of its potential returns per unit of risk. Wilk Technologies is currently generating about -0.06 per unit of risk. If you would invest  6,970  in Satcom Systems on September 28, 2024 and sell it today you would earn a total of  510.00  from holding Satcom Systems or generate 7.32% return on investment over 90 days.

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

Satcom Systems  vs.  Wilk Technologies

Satcom Systems

Risk-Adjusted Performance

16 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Satcom Systems are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Satcom Systems sustained solid returns over the last few months and may actually be approaching a breakup point.

Wilk Technologies

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Wilk Technologies 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 basic 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 Satcom Systems and Wilk Technologies

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

The idea behind Satcom Systems and Wilk Technologies 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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.