Correlation Between SIMMTECH and Aprogen KIC

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

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

Diversification Opportunities for SIMMTECH and Aprogen KIC

0.8

Correlation Coefficient

SIMMTECH  Aprogen KIC

Very poor diversification

The 3 months correlation between SIMMTECH and Aprogen is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding SIMMTECH Co and Aprogen KIC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aprogen KIC and SIMMTECH 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 SIMMTECH Co are associated (or correlated) with Aprogen KIC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aprogen KIC has no effect on the direction of SIMMTECH i.e., SIMMTECH and Aprogen KIC go up and down completely randomly.

Pair Corralation between SIMMTECH and Aprogen KIC

Assuming the 90 days trading horizon SIMMTECH Co is expected to under-perform the Aprogen KIC. But the stock apears to be less risky and, when comparing its historical volatility, SIMMTECH Co is 1.81 times less risky than Aprogen KIC. The stock trades about -0.06 of its potential returns per unit of risk. The Aprogen KIC is currently generating about -0.01 of returns per unit of risk over similar time horizon. If you would invest  171,566  in Aprogen KIC on September 30, 2024 and sell it today you would lose (94,166) from holding Aprogen KIC or give up 54.89% of portfolio value over 90 days.

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

SIMMTECH Co  vs.  Aprogen KIC

SIMMTECH

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days SIMMTECH Co has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain somewhat strong which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Aprogen KIC

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Aprogen KIC has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain somewhat strong which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with SIMMTECH and Aprogen KIC

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

The idea behind SIMMTECH Co and Aprogen KIC 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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..