Correlation Between Sure Tech and Millennium Food

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

By analyzing existing cross correlation between Sure Tech Investments LP and Millennium Food Tech LP, you can compare the effects of market volatilities on Sure Tech and Millennium Food 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 Sure Tech with a short position of Millennium Food. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sure Tech and Millennium Food.

Diversification Opportunities for Sure Tech and Millennium Food

0.33

Correlation Coefficient

Sure Tech  Millennium Food

Weak diversification

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

Pair Corralation between Sure Tech and Millennium Food

Assuming the 90 days trading horizon Sure Tech Investments LP is expected to generate 1.07 times more return on investment than Millennium Food. However, Sure Tech is 1.07 times more volatile than Millennium Food Tech LP. It trades about 0.2 of its potential returns per unit of risk. Millennium Food Tech LP is currently generating about 0.05 per unit of risk. If you would invest  57,980  in Sure Tech Investments LP on September 27, 2024 and sell it today you would earn a total of  19,230  from holding Sure Tech Investments LP or generate 33.17% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	97.83%
Values	Daily Returns

Sure Tech Investments LP  vs.  Millennium Food Tech LP

Sure Tech Investments

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Sure Tech Investments LP are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Sure Tech sustained solid returns over the last few months and may actually be approaching a breakup point.

Millennium Food Tech

Risk-Adjusted Performance

3 of 100

Insignificant

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

Pair Trading with Sure Tech and Millennium Food

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

The idea behind Sure Tech Investments LP and Millennium Food Tech LP 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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.