Correlation Between SFP Tech and Tadmax Resources

Can any of the company-specific risk be diversified away by investing in both SFP Tech and Tadmax Resources 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 Tadmax Resources 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 Tadmax Resources Berhad, you can compare the effects of market volatilities on SFP Tech and Tadmax Resources 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 Tadmax Resources. Check out your portfolio center. Please also check ongoing floating volatility patterns of SFP Tech and Tadmax Resources.

Diversification Opportunities for SFP Tech and Tadmax Resources

-0.19

Correlation Coefficient

SFP Tech  Tadmax Resources

Good diversification

The 3 months correlation between SFP and Tadmax is -0.19. Overlapping area represents the amount of risk that can be diversified away by holding SFP Tech Holdings and Tadmax Resources Berhad in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tadmax Resources Berhad 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 Tadmax Resources. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tadmax Resources Berhad has no effect on the direction of SFP Tech i.e., SFP Tech and Tadmax Resources go up and down completely randomly.

Pair Corralation between SFP Tech and Tadmax Resources

Assuming the 90 days trading horizon SFP Tech Holdings is expected to generate 0.7 times more return on investment than Tadmax Resources. However, SFP Tech Holdings is 1.44 times less risky than Tadmax Resources. It trades about 0.07 of its potential returns per unit of risk. Tadmax Resources Berhad is currently generating about -0.1 per unit of risk. If you would invest  64.00  in SFP Tech Holdings on September 12, 2024 and sell it today you would earn a total of  6.00  from holding SFP Tech Holdings or generate 9.38% return on investment over 90 days.

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

SFP Tech Holdings  vs.  Tadmax Resources Berhad

SFP Tech Holdings

Risk-Adjusted Performance

5 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in SFP Tech Holdings are ranked lower than 5 (%) 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.

Tadmax Resources Berhad

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Tadmax Resources Berhad 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.

Pair Trading with SFP Tech and Tadmax Resources

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

The idea behind SFP Tech Holdings and Tadmax Resources Berhad 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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.