Correlation Between Success Electronics and Shengtak New

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

By analyzing existing cross correlation between Success Electronics and Shengtak New Material, you can compare the effects of market volatilities on Success Electronics and Shengtak New 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 Success Electronics with a short position of Shengtak New. Check out your portfolio center. Please also check ongoing floating volatility patterns of Success Electronics and Shengtak New.

Diversification Opportunities for Success Electronics and Shengtak New

0.75

Correlation Coefficient

Success Electronics  Shengtak New

Poor diversification

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

Pair Corralation between Success Electronics and Shengtak New

Assuming the 90 days trading horizon Success Electronics is expected to generate 0.78 times more return on investment than Shengtak New. However, Success Electronics is 1.29 times less risky than Shengtak New. It trades about 0.23 of its potential returns per unit of risk. Shengtak New Material is currently generating about 0.1 per unit of risk. If you would invest  342.00  in Success Electronics on December 26, 2024 and sell it today you would earn a total of  126.00  from holding Success Electronics or generate 36.84% return on investment over 90 days.

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

Success Electronics  vs.  Shengtak New Material

Success Electronics

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Success Electronics are ranked lower than 17 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Success Electronics sustained solid returns over the last few months and may actually be approaching a breakup point.

Shengtak New Material

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Shengtak New Material are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Shengtak New sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Success Electronics and Shengtak New

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

The idea behind Success Electronics and Shengtak New Material 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 Portfolio Anywhere module to track or share privately all of your investments from the convenience of any device.