Correlation Between SFP Tech and Press Metal

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

Diversification Opportunities for SFP Tech and Press Metal

0.45

Correlation Coefficient

SFP Tech  Press Metal

Very weak diversification

The 3 months correlation between SFP and Press is 0.45. Overlapping area represents the amount of risk that can be diversified away by holding SFP Tech Holdings and Press Metal Bhd in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Press Metal 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 Press Metal. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Press Metal Bhd has no effect on the direction of SFP Tech i.e., SFP Tech and Press Metal go up and down completely randomly.

Pair Corralation between SFP Tech and Press Metal

Assuming the 90 days trading horizon SFP Tech Holdings is expected to under-perform the Press Metal. In addition to that, SFP Tech is 1.61 times more volatile than Press Metal Bhd. It trades about 0.0 of its total potential returns per unit of risk. Press Metal Bhd is currently generating about 0.01 per unit of volatility. If you would invest  515.00  in Press Metal Bhd on October 24, 2024 and sell it today you would earn a total of  3.00  from holding Press Metal Bhd or generate 0.58% return on investment over 90 days.

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

SFP Tech Holdings  vs.  Press Metal Bhd

SFP Tech Holdings

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in SFP Tech Holdings are ranked lower than 9 (%) 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.

Press Metal Bhd

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Press Metal Bhd are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting basic indicators, Press Metal may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with SFP Tech and Press Metal

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

The idea behind SFP Tech Holdings and Press Metal 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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.