Correlation Between Tex Cycle and SFP Tech

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

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

Diversification Opportunities for Tex Cycle and SFP Tech

0.12

Correlation Coefficient

Tex Cycle  SFP Tech

Average diversification

The 3 months correlation between Tex and SFP is 0.12. Overlapping area represents the amount of risk that can be diversified away by holding Tex Cycle Technology and SFP Tech Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SFP Tech Holdings and Tex Cycle 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 Tex Cycle Technology are associated (or correlated) with SFP Tech. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SFP Tech Holdings has no effect on the direction of Tex Cycle i.e., Tex Cycle and SFP Tech go up and down completely randomly.

Pair Corralation between Tex Cycle and SFP Tech

Assuming the 90 days trading horizon Tex Cycle Technology is expected to under-perform the SFP Tech. But the stock apears to be less risky and, when comparing its historical volatility, Tex Cycle Technology is 2.25 times less risky than SFP Tech. The stock trades about -0.25 of its potential returns per unit of risk. The SFP Tech Holdings is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest  64.00  in SFP Tech Holdings on September 4, 2024 and sell it today you would earn a total of  4.00  from holding SFP Tech Holdings or generate 6.25% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	98.41%
Values	Daily Returns

Tex Cycle Technology  vs.  SFP Tech Holdings

Tex Cycle Technology

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Tex Cycle Technology has generated negative risk-adjusted returns adding no value to investors with long positions. Despite conflicting performance in the last few months, the Stock's basic indicators remain quite persistent which may send shares a bit higher in January 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

SFP Tech Holdings

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in SFP Tech Holdings are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting basic indicators, SFP Tech may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Tex Cycle and SFP Tech

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

The idea behind Tex Cycle Technology and SFP Tech Holdings 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 Transaction History module to view history of all your transactions and understand their impact on performance.