Correlation Between SFP Tech and Sanichi Technology

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

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

Diversification Opportunities for SFP Tech and Sanichi Technology

0.08

Correlation Coefficient

SFP Tech  Sanichi Technology

Significant diversification

The 3 months correlation between SFP and Sanichi is 0.08. Overlapping area represents the amount of risk that can be diversified away by holding SFP Tech Holdings and Sanichi Technology Bhd in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sanichi Technology Bhd and SFP Tech 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 SFP Tech Holdings are associated (or correlated) with Sanichi Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sanichi Technology Bhd has no effect on the direction of SFP Tech i.e., SFP Tech and Sanichi Technology go up and down completely randomly.

Pair Corralation between SFP Tech and Sanichi Technology

Assuming the 90 days trading horizon SFP Tech is expected to generate 839.31 times less return on investment than Sanichi Technology. But when comparing it to its historical volatility, SFP Tech Holdings is 76.11 times less risky than Sanichi Technology. It trades about 0.02 of its potential returns per unit of risk. Sanichi Technology Bhd is currently generating about 0.22 of returns per unit of risk over similar time horizon. If you would invest  25.00  in Sanichi Technology Bhd on October 4, 2024 and sell it today you would lose (11.00) from holding Sanichi Technology Bhd or give up 44.0% of portfolio value over 90 days.

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

SFP Tech Holdings  vs.  Sanichi Technology Bhd

SFP Tech Holdings

Risk-Adjusted Performance

7 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in SFP Tech Holdings are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting basic indicators, SFP Tech disclosed solid returns over the last few months and may actually be approaching a breakup point.

Sanichi Technology Bhd

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Sanichi Technology Bhd are ranked lower than 15 (%) 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.

Pair Trading with SFP Tech and Sanichi Technology

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

The idea behind SFP Tech Holdings and Sanichi 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.

Check out your portfolio center.

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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.