Correlation Between SeAH Besteel and SIMMTECH

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

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

Diversification Opportunities for SeAH Besteel and SIMMTECH

0.23

Correlation Coefficient

SeAH Besteel  SIMMTECH

Modest diversification

The 3 months correlation between SeAH and SIMMTECH is 0.23. Overlapping area represents the amount of risk that can be diversified away by holding SeAH Besteel Corp and SIMMTECH Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SIMMTECH and SeAH Besteel 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 SeAH Besteel Corp are associated (or correlated) with SIMMTECH. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SIMMTECH has no effect on the direction of SeAH Besteel i.e., SeAH Besteel and SIMMTECH go up and down completely randomly.

Pair Corralation between SeAH Besteel and SIMMTECH

Assuming the 90 days trading horizon SeAH Besteel Corp is expected to under-perform the SIMMTECH. But the stock apears to be less risky and, when comparing its historical volatility, SeAH Besteel Corp is 3.18 times less risky than SIMMTECH. The stock trades about -0.01 of its potential returns per unit of risk. The SIMMTECH Co is currently generating about 0.23 of returns per unit of risk over similar time horizon. If you would invest  1,147,577  in SIMMTECH Co on December 24, 2024 and sell it today you would earn a total of  1,137,423  from holding SIMMTECH Co or generate 99.12% return on investment over 90 days.

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

SeAH Besteel Corp  vs.  SIMMTECH Co

SeAH Besteel Corp

Risk-Adjusted Performance

Very Weak

Over the last 90 days SeAH Besteel Corp has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, SeAH Besteel is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

SIMMTECH

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in SIMMTECH Co are ranked lower than 18 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, SIMMTECH sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with SeAH Besteel and SIMMTECH

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

The idea behind SeAH Besteel Corp and SIMMTECH 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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.