Correlation Between SIMMTECH and LEENO Industrial

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

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

Diversification Opportunities for SIMMTECH and LEENO Industrial

0.54

Correlation Coefficient

SIMMTECH  LEENO Industrial

Very weak diversification

The 3 months correlation between SIMMTECH and LEENO is 0.54. Overlapping area represents the amount of risk that can be diversified away by holding SIMMTECH Co and LEENO Industrial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on LEENO Industrial 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 LEENO Industrial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of LEENO Industrial has no effect on the direction of SIMMTECH i.e., SIMMTECH and LEENO Industrial go up and down completely randomly.

Pair Corralation between SIMMTECH and LEENO Industrial

Assuming the 90 days trading horizon SIMMTECH is expected to generate 4.82 times less return on investment than LEENO Industrial. In addition to that, SIMMTECH is 1.02 times more volatile than LEENO Industrial. It trades about 0.1 of its total potential returns per unit of risk. LEENO Industrial is currently generating about 0.51 per unit of volatility. If you would invest  15,911,300  in LEENO Industrial on October 6, 2024 and sell it today you would earn a total of  4,988,700  from holding LEENO Industrial or generate 31.35% return on investment over 90 days.

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

SIMMTECH Co  vs.  LEENO Industrial

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.

LEENO Industrial

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in LEENO Industrial are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, LEENO Industrial may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with SIMMTECH and LEENO Industrial

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

The idea behind SIMMTECH Co and LEENO Industrial 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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.