Correlation Between SIMMTECH and Robostar CoLtd

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

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

Diversification Opportunities for SIMMTECH and Robostar CoLtd

0.49

Correlation Coefficient

SIMMTECH  Robostar CoLtd

Very weak diversification

The 3 months correlation between SIMMTECH and Robostar is 0.49. Overlapping area represents the amount of risk that can be diversified away by holding SIMMTECH Co and Robostar CoLtd in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Robostar CoLtd 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 Robostar CoLtd. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Robostar CoLtd has no effect on the direction of SIMMTECH i.e., SIMMTECH and Robostar CoLtd go up and down completely randomly.

Pair Corralation between SIMMTECH and Robostar CoLtd

Assuming the 90 days trading horizon SIMMTECH Co is expected to under-perform the Robostar CoLtd. But the stock apears to be less risky and, when comparing its historical volatility, SIMMTECH Co is 1.1 times less risky than Robostar CoLtd. The stock trades about -0.15 of its potential returns per unit of risk. The Robostar CoLtd is currently generating about 0.0 of returns per unit of risk over similar time horizon. If you would invest  2,820,000  in Robostar CoLtd on October 5, 2024 and sell it today you would lose (230,000) from holding Robostar CoLtd or give up 8.16% of portfolio value over 90 days.

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

SIMMTECH Co  vs.  Robostar CoLtd

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.

Robostar CoLtd

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Robostar CoLtd are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Robostar CoLtd sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with SIMMTECH and Robostar CoLtd

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

The idea behind SIMMTECH Co and Robostar CoLtd 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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.