Correlation Between SIMMTECH and Interflex

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

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

Diversification Opportunities for SIMMTECH and Interflex

0.96

Correlation Coefficient

SIMMTECH  Interflex

Almost no diversification

The 3 months correlation between SIMMTECH and Interflex is 0.96. Overlapping area represents the amount of risk that can be diversified away by holding SIMMTECH Co and Interflex Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Interflex 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 Interflex. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Interflex has no effect on the direction of SIMMTECH i.e., SIMMTECH and Interflex go up and down completely randomly.

Pair Corralation between SIMMTECH and Interflex

Assuming the 90 days trading horizon SIMMTECH Co is expected to under-perform the Interflex. But the stock apears to be less risky and, when comparing its historical volatility, SIMMTECH Co is 1.4 times less risky than Interflex. The stock trades about -0.18 of its potential returns per unit of risk. The Interflex Co is currently generating about 0.0 of returns per unit of risk over similar time horizon. If you would invest  1,088,000  in Interflex Co on October 5, 2024 and sell it today you would lose (171,000) from holding Interflex Co or give up 15.72% of portfolio value over 90 days.

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

SIMMTECH Co  vs.  Interflex Co

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 February 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Interflex

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Interflex 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 February 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with SIMMTECH and Interflex

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

The idea behind SIMMTECH Co and Interflex Co 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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.