Correlation Between Sanichi Technology and Greatech Technology

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

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

Diversification Opportunities for Sanichi Technology and Greatech Technology

-0.27

Correlation Coefficient

Sanichi Technology  Greatech Technology

Very good diversification

The 3 months correlation between Sanichi and Greatech is -0.27. Overlapping area represents the amount of risk that can be diversified away by holding Sanichi Technology Bhd and Greatech Technology Bhd in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Greatech Technology Bhd and Sanichi 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 Sanichi Technology Bhd are associated (or correlated) with Greatech Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Greatech Technology Bhd has no effect on the direction of Sanichi Technology i.e., Sanichi Technology and Greatech Technology go up and down completely randomly.

Pair Corralation between Sanichi Technology and Greatech Technology

Assuming the 90 days trading horizon Sanichi Technology Bhd is expected to generate 13.85 times more return on investment than Greatech Technology. However, Sanichi Technology is 13.85 times more volatile than Greatech Technology Bhd. It trades about 0.08 of its potential returns per unit of risk. Greatech Technology Bhd is currently generating about 0.28 per unit of risk. If you would invest  15.00  in Sanichi Technology Bhd on September 23, 2024 and sell it today you would lose (2.00) from holding Sanichi Technology Bhd or give up 13.33% of portfolio value over 90 days.

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

Sanichi Technology Bhd  vs.  Greatech Technology Bhd

Sanichi Technology Bhd

Risk-Adjusted Performance

17 of 100

Solid

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

Greatech Technology Bhd

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Greatech Technology Bhd are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite quite persistent basic indicators, Greatech Technology is not utilizing all of its potentials. The latest stock price mess, may contribute to short-term losses for the institutional investors.

Pair Trading with Sanichi Technology and Greatech Technology

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

The idea behind Sanichi Technology Bhd and Greatech Technology Bhd 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.