Correlation Between SFP Tech and Rubberex M

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

Diversification Opportunities for SFP Tech and Rubberex M

0.84

Correlation Coefficient

SFP Tech  Rubberex M

Very poor diversification

The 3 months correlation between SFP and Rubberex is 0.84. Overlapping area represents the amount of risk that can be diversified away by holding SFP Tech Holdings and Rubberex M in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Rubberex M 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 Rubberex M. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Rubberex M has no effect on the direction of SFP Tech i.e., SFP Tech and Rubberex M go up and down completely randomly.

Pair Corralation between SFP Tech and Rubberex M

Assuming the 90 days trading horizon SFP Tech Holdings is expected to under-perform the Rubberex M. In addition to that, SFP Tech is 1.09 times more volatile than Rubberex M. It trades about -0.37 of its total potential returns per unit of risk. Rubberex M is currently generating about -0.1 per unit of volatility. If you would invest  18.00  in Rubberex M on December 4, 2024 and sell it today you would lose (4.00) from holding Rubberex M or give up 22.22% of portfolio value over 90 days.

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

SFP Tech Holdings  vs.  Rubberex M

SFP Tech Holdings

Risk-Adjusted Performance

Very Weak

Over the last 90 days SFP Tech Holdings 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 April 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Rubberex M

Risk-Adjusted Performance

Very Weak

Over the last 90 days Rubberex M 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 April 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 Rubberex M

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

The idea behind SFP Tech Holdings and Rubberex M 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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.