Correlation Between Soyea Technology and Montage Technology

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

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

Diversification Opportunities for Soyea Technology and Montage Technology

0.35

Correlation Coefficient

Soyea Technology  Montage Technology

Weak diversification

The 3 months correlation between Soyea and Montage is 0.35. Overlapping area represents the amount of risk that can be diversified away by holding Soyea Technology Co and Montage Technology Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Montage Technology and Soyea Technology 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 Soyea Technology Co are associated (or correlated) with Montage Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Montage Technology has no effect on the direction of Soyea Technology i.e., Soyea Technology and Montage Technology go up and down completely randomly.

Pair Corralation between Soyea Technology and Montage Technology

Assuming the 90 days trading horizon Soyea Technology Co is expected to generate 0.61 times more return on investment than Montage Technology. However, Soyea Technology Co is 1.64 times less risky than Montage Technology. It trades about 0.21 of its potential returns per unit of risk. Montage Technology Co is currently generating about 0.09 per unit of risk. If you would invest  360.00  in Soyea Technology Co on October 3, 2024 and sell it today you would earn a total of  201.00  from holding Soyea Technology Co or generate 55.83% return on investment over 90 days.

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

Soyea Technology Co  vs.  Montage Technology Co

Soyea Technology

Risk-Adjusted Performance

15 of 100

Good

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

Montage Technology

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Montage Technology Co has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Pair Trading with Soyea Technology and Montage Technology

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

The idea behind Soyea Technology Co and Montage Technology Co 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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.