Correlation Between SIMMTECH and A-Tech Solution

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

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

Diversification Opportunities for SIMMTECH and A-Tech Solution

0.76

Correlation Coefficient

SIMMTECH  A-Tech Solution

Poor diversification

The 3 months correlation between SIMMTECH and A-Tech is 0.76. Overlapping area represents the amount of risk that can be diversified away by holding SIMMTECH Co and A Tech Solution Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on A Tech Solution 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 A-Tech Solution. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of A Tech Solution has no effect on the direction of SIMMTECH i.e., SIMMTECH and A-Tech Solution go up and down completely randomly.

Pair Corralation between SIMMTECH and A-Tech Solution

Assuming the 90 days trading horizon SIMMTECH Co is expected to generate 1.82 times more return on investment than A-Tech Solution. However, SIMMTECH is 1.82 times more volatile than A Tech Solution Co. It trades about 0.22 of its potential returns per unit of risk. A Tech Solution Co is currently generating about 0.09 per unit of risk. If you would invest  1,056,405  in SIMMTECH Co on December 2, 2024 and sell it today you would earn a total of  963,595  from holding SIMMTECH Co or generate 91.21% return on investment over 90 days.

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

SIMMTECH Co  vs.  A Tech Solution Co

SIMMTECH

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in SIMMTECH Co are ranked lower than 17 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, SIMMTECH sustained solid returns over the last few months and may actually be approaching a breakup point.

A Tech Solution

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in A Tech Solution Co are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, A-Tech Solution sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with SIMMTECH and A-Tech Solution

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

The idea behind SIMMTECH Co and A Tech Solution 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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.