Correlation Between Simple Mart and Chaheng Precision

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

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

Diversification Opportunities for Simple Mart and Chaheng Precision

0.39

Correlation Coefficient

Simple Mart  Chaheng Precision

Weak diversification

The 3 months correlation between Simple and Chaheng is 0.39. Overlapping area represents the amount of risk that can be diversified away by holding Simple Mart Retail and Chaheng Precision Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Chaheng Precision and Simple Mart 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 Simple Mart Retail are associated (or correlated) with Chaheng Precision. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Chaheng Precision has no effect on the direction of Simple Mart i.e., Simple Mart and Chaheng Precision go up and down completely randomly.

Pair Corralation between Simple Mart and Chaheng Precision

Assuming the 90 days trading horizon Simple Mart is expected to generate 18.37 times less return on investment than Chaheng Precision. But when comparing it to its historical volatility, Simple Mart Retail is 1.66 times less risky than Chaheng Precision. It trades about 0.0 of its potential returns per unit of risk. Chaheng Precision Co is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest  7,765  in Chaheng Precision Co on October 23, 2024 and sell it today you would earn a total of  1,335  from holding Chaheng Precision Co or generate 17.19% return on investment over 90 days.

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

Simple Mart Retail  vs.  Chaheng Precision Co

Simple Mart Retail

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Simple Mart Retail has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable basic indicators, Simple Mart is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Chaheng Precision

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Chaheng Precision Co are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of fairly stable basic indicators, Chaheng Precision is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Pair Trading with Simple Mart and Chaheng Precision

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

The idea behind Simple Mart Retail and Chaheng Precision 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.

Check out your portfolio center.

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 Portfolio Center module to all portfolio management and optimization tools to improve performance of your portfolios.